INTRODUCTION TO HUMAN RESOURCES: Human Resource Management is essential in all sectors and this project deals with human

resources in general and in the banking sector. Before discussing Human Resources in the banking sector it is essential to understand the basic concept of human resources as well as that of management. The term human resource is variously defined in political economy and economics, where it was traditionally called labor, one of three factors of production. ts use within corporations continues to define common conceptions of the term. Modern analysis emphasi!es that human beings are not predictable commodity "resources" with definitions totally controlled by contract, but are creative and social beings that make contributions beyond "labor" to a society and to civili!ation. The broad term human capital has evolved to contain the comple#ity of this term, and in macro$economics the term "firm$ specific human capital" has evolved to represent the original meaning of term "human resources".

What is Management? Management is concerned with the human beings whose behavior is highly unpredictable. &ver since people began forming groups to achieve as individuals. Managing has been essential to provide the coordination of individual's efforts. Management does not perform specific jobs. t motivates other people to perform specific jobs. t indicates a total process of e#ecutive control in business. t implies undertaking of responsibility for effective planning, policy making, and fi#ation of targets and operative functions of providing men, money and materials to run day$to$day administration. Management is concerned with actually directing and guiding the operations to achieve business objectives. t uses human efforts to reach the predetermined goals. Regulation, (ontrol and evaluation of human efforts in the direction of achieving the given objectives are the primary functions of management. )lso, management refers to bringing together of physical and human resources to carry on planned activities and control performance in order to ensure that what is done is what is expected. Management is applicable to both profit$making and service$rendering organi!ations.

Nature of Management ( !" Management as an e#onomi# resour#e: Historically, land and capital were treated as sources of production. +ow along with land and capital, labor and management are given the status of economic resource. Management coordinates as well as controls economic resources. t facilitates effective use of other resources for achieving specific objectives.

($!" Management as a s%stem of authorit%: ) manager is given specific duties and also the authority. He has to achieve certain results with the participation of others. He has to get the work done through the others. ) manager can achieve results through delegated authority as per the need of the situation.

(&!" Management is a grou' a#ti(it%: Management is not individualistic but a joint activity. Managers have to guide and motivate their subordinates. Management is an activity of a group. Results will not be achieved only by the managers but also bt the cooperation and participation of subordinates.

Chara#teristi# features of Management: ) few of the characteristic features of management are( !" Management is a 'ro#ess: Management is a process and not merely a body of individuals. Those who perform this process are called managers. The managers e#ercise leadership by assuming authority and direct others to act within the organi!ation. ($!" Management is a so#ia) 'ro#ess: Management takes place through people. ) manager's job is to get the things done with the support and cooperation of subordinates. t is this human element which gives management its special character. (&!" Management is a grou' a#ti(it%: Management is not an isolated activity but it is an activity of a group. t aims at using group efforts for achieving objectives. (*!" Management is a)) 'ersuasi(e: Management is comprehensive and covers all departments, activities and employees. Managers are working at different levels but their functions are identical. This indicates that the management is a universal process.

(+!" Management is inno(ati(e: Management techni/ues are dynamic and innovative. 0uch techni/ues are adjusted as per the re/uirements of the situations. )nother manager need not repeat the decisions of one manager. 0imilarly, a manager has to change his decisions under different situations. Nee, for Management ( !" Dire#tion an, #ontro) of grou' efforts: n business, many persons work together. They need proper direction, guidance and even motivation for raising their efficiency. n the absence of guidance, people will work as per their desire and the orderly working of enterprise will not be possible. Management is needed for guiding employees in the right direction and for coordinating their efforts.

($!" Or,er)% a#hie(ement of -usiness o-.e#ti(es: &fficient management is needed in order to achieve the objectives of business activity in an orderly and /uick manner.

(&!" /erforman#e of -asi# manageria) fun#tions: 2lanning, organi!ing, coordinating and controlling are the basic functions of management. Management is needed as these functions are performed through the management process. (*!" Effe#ti(e #ommuni#ation at a)) )e(e)s: Management is needed for effective communication within and outside the organi!ation. (+!" Moti(ation of em')o%ees: Management is needed for motivating employees and also for coordinating their efforts to achieve business objectives /uickly. (0!" Su##ess an, sta-i)it% of the -usiness enter'rise: &fficient management is needed for success, progress and smooth functioning of a business enterprise

Im'ortan#e of Management The importance of management in business is universally accepted. Modern business is highly competitive and needs efficient and capable management. t is through management that business activities are organi!ed and conducted efficiently. 4ollowing are few of the points that suggest the importance of management( !" O'timum use of resour#es: Management facilities optimum utili!ation of human and physical resources, which leads to progress and prosperity of a business enterprise. ($!" Com'etiti(e strength: Management develops competitive strength in an enterprise. This enables an enterprise to develop and e#pand its assets and profits. (&!" Moti(ates em')o%ees: t motivates employees to take more interest and initiatives in the work assigned and contribute for raising productivity and profitability of the enterprise.

(*!" E1'ansion of -usiness: &#pansion, growth and diversification of a business unit are possible through efficient management. t creates good corporate image to a business enterprise. (+!" Re,u#es turno(er an, a-senteeism: t reduces labor turnover and absenteeism and ensures continuity in the business activities and operations.

HUMAN RESOURCE MANA2EMENT

Human Resour#e Management or /ersonne) management is the activity of managing personnel, usually employees. n any organi!ation, managing personnel is the process of making sure the employees 7not the customers8 are as productive as they can be. This can include hiring, firing, or transferring people to9from jobs they can do most productively. This subject is a major at many universities, or a minor in the business school. t is also known as personnel administration, which is functionally an e/uivalent term.

Meaning of Human Resour#e Management: ) business unit needs employees to look after different activities. This is called manpower or human resource. 0uch human resource needs to be developed fully so that it will make positive contribution for the progress and prosperity of a business unit. 4or this systematic development and management of human resources is necessary. Human Resource Management 7HRM8 deals with7a8 Training 7b8 0elf$development 7c8 2romotions 7d8 2erformance appraisal of manpower recruited in an organi!ation.

HRM is an organi!ed learning e#perience aimed at matching the organi!ational need for career growth and development. t is a process involving series of learning activities designed to ac/uire desired level of competence among employees. HRM is a continuous process and it needs money. 0uch investment creates a team of efficient, skilled and trained manpower which brings success and stability to a business unit. HRM programmes offer long term benefits to an organi!ation.

Chara#teristi#s of Human Resour#e Management:

7%8. U'gra,ing Man'o3er: HRM is basically concerned with the upgrading of manpower working in an organi!ation. This leads to improvement in the individual performance of an employee and also corresponding improvement in the organi!ational performance. 7*8. Stress on Training: HRM includes various schemes arranged for providing education, guidance, training and opportunities to learn and develop employees of all categories and working in different departments. There is an integrated use of sub$systems 7training, career developments, organi!ational development8 in the HRM programme.
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7,8. Attention to )earning an, #areer ,e(e)o'ment: <earning, self$development, career developments are possible through HRM programmes. These are the core areas of HRM. (areer development is possible through joining training courses, reading books and periodicals. <earning and career development raise the capacity of employees to work at highest levels. They are given higher positions with monetary benefits. 7.8. Organi4ationa) De(e)o'ment: HRM includes organi!ational development, which includes effective communication within the organi!ation, coordination of different activities, elimination of conflicts of different types and creation of orderly atmosphere in the whole organi!ation. 718. Team S'irit: HRM is basically for developing team spirit in the whole organi!ation. 4or this, departments and levels of management are properly integrated. Team spirit facilitates orderly growth of the organi!ation in the right direction. 738. Huge s'en,ing -% Management: )ll companies invest huge money on HRM activities but such e#penditure is absolutely essential for survival in the present competitive

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business world. HRM programmes create matured, skilled and efficient manpower, which is a valuable asset of a business unit. 758. Termination of Em')o%ment: Termination is an unpleasant part of any manager's job. &mployees occasionally must be terminated for breaking rules of failing to perform ade/uately. 768. Continuous A#ti(it%: HRM is rightly treated as a continuous activity due to new developments taking place regularly in the business world. 4or this, on the job and off the job training programmes are introduced from time$to$time. 7:8. Wi,e S#o'e: The scope of HRM programmes is very vast. t is multi$disciplinary in character. Training and guidance are given on different aspects of business management to enable managers to deal with comple# managerial problems and challenges.

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NEED

AND

IM/ORTANCE

O5

HUMAN

RESOURCE

MANA2EMENT:

7%8. To #reate sta-)e )a-or for#e: HRM programmes are needed in order to create stable, efficient, skilled and matured manpower re/uired by an enterprise for the present and future period. 7*8. To u',ate the 6ua)it% of man'o3er: HRM activities are needed for updating the /uality of manpower as per the growing and changing needs of an enterprise. This avoids managerial obsolescence. &ven the vacancies at higher levels can be filled in internally due to HRM programmes as they provide training and opportunities of self$ development to employees working at lower levels. 7,8. To ,e(e)o' strength for sur(i(a): HRM programmes are necessary for survival in the present competitive marketing environment. )n enterprise can face market competition only by improvimg /uality, reducing costs and avoiding wastages. )ll this is possible through HRM.

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7.8. To fa#e #ha))enges of te#hno)ogi#a) #hanges: Technological changes are taking place rapidly in every area of business. HRM programmes are needed in order to absorb technological changes taking place with speed. n fact, introduction of new technology, computers, automation, etc. will not be possible unless training is provided to the manpower. 718. To satisf% the ,eman, of se)f7,e(e)o'ment of em')o%ees: HRM is needed to meet the needs of employees in regard to self$ development and career development aspirations. &mployees demand, training facilities, refresher courses, promotions and transfers, career guidance, etc. for their self$development. HRM programmes are needed to fulfill self$development and career development of employees. 738. To meet future man'o3er nee,s: HRM is needed to meet the future manpower needs of the organi!ation. &#ecutives, managers, supervisors leave the job or retire due to age factor. (ompetent juniors must take their positions. HRM is needed in order to keep ready a team of competent managers as a second line of defense.

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758. To fa#i)itate e1'ansion an, ,i(ersifi#ation: HRM activities are needed to meet the manpower re/uirements resulting from e#pansion and diversification programmes undertaken at the enterprise level. )ttention should be given to HRM much before the introduction of e#pansion programme. 768. To uti)i4e 'ro,u#tion #a'a#it% fu))%: HRM is needed in order to use the available production capacity to the optimum level. t provides skilled manpower for this purpose.

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SCO/E O5 HUMAN RESOURCE MANA2EMENT:

7%8 Training: Training is an essential element of HRM. This develops skills and capacity to work at higher levels and positions. Training is possible by different methods. t is useful for self$development and career development. 7*8. /erforman#e A''raisa): 2erformance appraisal is an important area of HRM. The purpose of performance appraisal is to study critically the performance of an employee and to guide him to improve his performance. )n employee is told about his strengths and weaknesses and assistance is given to remove weaknesses and make the plus points more strong. This techni/ue is useful for building a team of capable employees and is also used for their self$development. 7,8. /otentia) A''raisa)t relates to the study of capabilities of employees. t is useful for proper placement and career development of employees. 2otential appraisal of employees is useful for developing their special /ualities, which can be used fruitfully along with the e#pansion and diversification of activities of the company. 2otential appraisal is possible by the superior with the help of different methods.
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7.8. Career ')anning an, ,e(e)o'ment: =nder HRM employees should be given guidance for their self$ development and career development. The opportunities likely to develop in the organi!ation should be brought to their notice. They should be motivated for self$development, which is useful to the organi!ation in the long run. 0uperiors are supposed to provide information and guidance to their juniors in this regard. (areer development is an integral part of HRM. 718. Em')o%ees 3e)fare: &mployee's welfare is within the scope of HRM. >elfare facilities are useful for creating efficient and satisfied labor force. 0uch facilities raise the morale of employees. &mployee's welfare includes the provision of medical and recreation facilities, subsidi!ed canteen, free transport and medical insurance. 0uch facilities support training and other measures introduced for HRM. 738. Re3ar,s an, in#enti(es: HRM includes provision of rewards and incentives to employees to encourage them to learn, to grow and to develop new /ualities, skills and e#periences which will be useful in the near future. Reward is an appreciation of good work. t may be in the form of promotion, higher salary or higher status. Rewards and incentives motivate employees and raise their morale.
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758. Organi4ationa) ,e(e)o'ment: HRM aims at providing conflict$free operations throughout the organi!ation. t also keeps plans ready to deal with problems like absenteeism, turnover, low productivity or industrial disputes. 768. 8ua)it% of 3or9 )ife: ?uality of work life depends on sound relations between employers and employees. ) forward looking policy on employee benefits like job security, attractive pay, participative management and monetary and non$monetary rewards will go a long way in improving the /uality of work life helps employees to strike an identity with the organi!ation. 7:8. Human resour#e information s%stem: 0uch system acts as an information bank and facilities human resource planning and development in a proper manner. t facilitates /uick decision making in regard to HRM. &very organi!ation has to introduce such system for ready reference to HRM matters. =pdating of such information is also essential.

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HUMAN RESOURCE MANA2EMENT S:STEMS:

Human Resour#e Management S%stems (HRMS; EHRMS!, Human Resour#e Information S%stems (HRIS!, HR Te#hno)og% or also called HR mo,u)es, shape an intersection in between human resource management and information technology. t merges HRM as a discipline and in particular its basic HR activities and processes with the information technology field, whereas the planning and programming of data processing systems evolved into standardised routines and packages of enterprise resource planning 7&R28 software. @n the whole, these &R2 systems have their origin on software that integrates information from different applications into one universal database. The linkage of its financial and human resource modules through one database is the most important distinction to the individually and proprietary developed predecessors, which makes this software application both rigid and fle#ible. The HR fun#tion<s rea)it% )ll in all, the HR function is still to a large degree administrative and common to all organisations. To varying degrees, most organisations have formalised selection, evaluation, and payroll processes. &fficient and effective management of the "Human (apital" 2ool 7H(28 has become an increasingly imperative and comple# activity to all HR professionals. The HR function consists of tracking innumerable data points on each employee, from personal histories, data, skills, capabilities, e#periences to payroll records. To reduce the manual workload of these administrative activities, organisations began to electronically automate many of these processes by
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introducing innovative HRM09H(M technology. Aue to comple#ity in programming, capabilities and limited technical resources, HR e#ecutives rely on internal or e#ternal T professionals to develop and maintain their Human Resource Management 0ystems 7HRM08. Before the "client$server" architecture evolved in the late %:6;s, every single HR automation process came largely in form of mainframe computers that could handle large amounts of data transactions. n conse/uence of the high capital investment necessary to purchase or program proprietary software, these internally developed HRM0 were limited to medium to large organisations being able to afford internal T capabilities. The advent of client$server HRM0 authorised HR e#ecutives for the first time to take responsibility and ownership of their systems. These client$server HRM0 are characteristically developed around four principal areas of HR functionalities- %8 "payroll", *8 time and labour management ,8 benefits administration and .8 HR management.

The 'a%ro)) mo,e):

automates the pay process by gathering data on

employee time and attendance, calculating various deductions and ta#es, and generating periodic payche/ues and employee ta# reports. Aata is generally fed from the human resources and time keeping modules to calculate automatic deposit and manual che/ue writing capabilities. 0ophisticated H(M systems can set up accounts payable transactions from employee deduction or produce garnishment che/ues. The payroll module sends accounting information to the general ledger for posting subse/uent to a pay cycle.

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The time an, )a-our management mo,u)e: applies new technology and methods 7time collection devices8 to cost effectively gather and evaluate employee time9work information. The most advanced modules provide broad fle#ibility in data collection methods, as well as labour distribution capabilities and data analysis features. This module is a key ingredient to establish organisational cost accounting capabilities. The -enefit a,ministration mo,e): permits HR professionals to easily administer and track employee participation in benefits programs ranging from healthcare provider, insurance policy, and pension plan to profit sharing or stock option plans. The HR management mo,u)e: is a component covering all other HR aspects from application to retirement. The system records basic demographic and address data, selection, training and development, capabilities and skills management, compensation planning records and other related activities. <eading edge systems provide the ability to "read" applications and enter relevant data to applicable database fields, notify employers and provide position management and position control. T%'i#a))%; HRMS=HCM te#hno)og% re')a#es the four #ore HR a#ti(ities -% stream)ining them e)e#troni#a))%> %8 payroll, *8 time and labour management, ,8 benefit administration and .8 HR management. >hile using the internet or corporate intranet as a communication and workflow vehicle, the HRM09H(M technology can convert these into web$based HRM0 components of the &R2 system and permit to reduce transaction costs, leading to greater HR and organisational efficiency. Through employee or manager self$service 7&00 or M008, HR activities shift away from paper
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based processes to using self$service functionalities that benefit employees, managers and HR professionals alike. (ostly and time consuming HR administrative tasks, such as travel reimbursement, personnel data change, benefits enrolment, enrolment in training classes 7employee side8 and to instruct a personnel action, authorise access to information for employees 7managerBs side8 are being individually handled and permit to reduce HR transaction time, leading to HR and organisational effectiveness. (onse/uently, HR professionals can spend fewer resources in managing administrative HR activities and can apply freed time and resources to concentrate on strategic HR issues, which lead to business innovation.

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THE TWO THEORIES WHICH SU//ORT HUMAN RESOURCE MANA2EMENT" THEOR: ? AND THEOR: : Theor% ? and Theor% : are theories of human motivation developed by Aouglas McCregor at the M T 0loan 0chool of Management in the %:3;s that have been used in human resource management, organi!ational behavior, and organi!ational development. They describe two very different attitudes toward workforce motivation. McCregor felt that companies followed either one or the other approach. Theor% ? n this theory management assumes employees are inherently la!y and will avoid work if they can. Because of this workers need to be closely supervised and comprehensive systems of controls developed. )n hierarchical structure is needed with narrow span of control at each level. )ccording to this theory employees will show little ambition without an enticing incentive program and will avoid responsibility whenever they can. )ccording to McCregor, most managers 7in the %:3;s8 tend to subscribe to Theory D, in that they take a rather pessimistic view of their employees. ) Theory D manager believes that his or her employees do not really want to work, that they would rather avoid responsibility and that it is the managerBs job to structure the work and energi!e the employee. The result of this line of thought is that Theory D managers naturally adopt a more authoritarian style based on the threat of punishment.

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Theor% : n this theory management assumes employees are ambitious, self$ motivated, and an#ious to accept greater responsibility, and e#ercise self$ control and self$direction. t is believed that employees enjoy their mental and physical work activities. t is also believed that employees have the desire to be imaginative and creative in their jobs if they are given a chance. There is an opportunity for greater productivity by giving employees the freedom to be their best. ) Theory E manager believes that, given the right conditions, most people will want to do well at work and that there is a pool of unused creativity in the workforce. They believe that the satisfaction of doing a good job is a strong motivation in and of itself. ) Theory E manager will try to remove the barriers that prevent workers from fully actuali!ing their potential. M#2regor an, Mas)o3<s hierar#h% McCregorBs work was based on MaslowBsFhierarchyFofFneeds. He grouped MaslowBs hierarchy into "lower order" 7Theory D8 needs and "higher order" 7Theory E8 needs. He suggested that management could use either set of needs to motivate employees but that better results could be obtained by meeting the Theory E needs.

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Chara#teristi#s of the ? Theor% Manager

Results$driven and deadline$driven, to the e#clusion of everything else ntolerant ssues deadlines and ultimatums Aistant and detached )loof and arrogant &litist 0hort temper 0houts ssues instructions, directions, edicts ssues threats to make people follow instructions Aemands, never asks Aoes not participate Aoes not team$build =nconcerned about staff welfare, or morale 2roud, sometimes to the point of self$destruction @ne$way communicator 2oor listener 4undamentally insecure and possibly neurotic )nti$social vengeful and recriminatory Aoes not thank or praise >ithholds rewards, and suppresses pay and remunerations levels 0crutinises e#penditure to the point of false economy 0eeks culprits for failures or shortfalls

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0eeks to apportion blame instead of focusing on learning from the e#perience and preventing recurrence Aoes not invite or welcome suggestions Takes criticism badly and likely to retaliate if from below or peer group 2oor at proper delegating $ but believes they delegate well Thinks giving orders is delegating Holds on to responsibility but shifts accountability to subordinates Relatively unconcerned with investing in anything to gain future improvements =nhappy

Managing an ? Theor% -oss >orking for an D Theory boss isnBt easy $ some e#treme D theory managers can be e#tremely unpleasant $ but there are ways of managing these people upwards. )voiding confrontation 7unless you are genuinely being bullied8 and delivering results are the key tactics. Theory D managers 7or indeed theory E managers displaying theory D behaviour8 are primarily results oriented $ so orientate your own discussions and dealings with them around results $ ie what you can deliver and when. Theory D managers are facts and figures oriented $ so cut out the incidentals, be able to measure and substantiate anything you say and do for them, especially reporting on results and activities.

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Theory D managers generally donBt understand or have an interest in the human issues, so donBt try to appeal to their sense of humanity or morality. 0et your own objectives to meet their organisational aims and agree these with the managersG be seen to be self$starting, self$motivating, self$ disciplined and well$organised $ the more the D theory manager sees you are managing yourself and producing results, the less theyBll feel the need to do it for you. )lways deliver your commitments and promises. f you are given an unrealistic task and9or deadline, state the reasons why itBs not realistic, but be very sure of your ground, donBt be negativeG be constructive as to how the overall aim can be achieved in a way that you know you can deliver. 0tand up for yourself, but constructively $ avoid confrontation. +ever threaten or go over their heads if you are dissatisfied or youBll be in big trouble afterwards and life will be a lot more difficult. f an D theory boss tells you how to do things in ways that are not comfortable or right for you, then donBt /uestion the process, simply confirm the end$result that is re/uired, and check that itBs okay to Bstreamline the processB or Bget things done more efficientlyB if the chance arises $ theyBll normally agree to this, which effectively gives you control over the BhowB, provided you deliver the BwhatB and BwhenB. )nd this is really the essence of managing upwards D theory managers $ focus and get agreement on the results and deadlines $ if you consistently deliver, youBll increasingly be given more leeway on how you go about the tasks, which amounts to more freedom. Be aware also that many D theory managers are forced to be D theory by the short$term demands of the organisation and their own

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superiors $ an D theory manager is usually someone with their own problems, so try not to give them any more.

Criti#isms Today the theories are seldom used. They are thought to e#press e#treme positions that are not realistic. Most employees fall somewhere in between these e#tremes and the theories are of little help in everyday human resource management decisions. However Theory D and Theory E are still important terms in the field of management and motivation. Recent studies have /uestioned the rigidity of the model, but McCregorBs D$E Theory remains a guiding principle of positive approaches to management, to organi!ational development, and to improving organi!ational culture.

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HUMAN RESOURCE MANA2EMENT IN @ANAIN2: What is a @an9? The word bank is derived from the talian banca, which is derived from Cerman language and means bench. The terms bankrupt and "broke" are similarly derived from banca rotta, which refers to an out of business bank, having its bench physically broken. Money lenders in +orthern taly originally did business in open areas, or big open rooms, with each lender working from his own bench or table. The essential function of a -an9 is to provide services related to the storing of deposits and the e#tending of credit. The evolution of banking dates back to the earliest writing, and continues in the present where a bank is a financial institution that provides banking and other financial services. (urrently the term bank is generally understood as an institution that holds a banking license. Banking licenses are granted by financial supervision authorities and provide rights to conduct the most fundamental banking services such as accepting deposits and making loans. There are also financial institutions that provide certain banking services without meeting the legal definition of a bank, a so called non$bank. Banks are a subset of the financial services industry. Human resource management 7HRM8 has long been overlooked in the corporate sector in the country where a small section, comprising mostly the multi$national companies was practicing the same.

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>ith the growing reali!ation of proper HRM in the corporate sector, it has grown into an important activity. +ow the head of HRM is an important member of the senior teams of any thriving business. )lthough the idea is new for many local businesses where entrepreneurs are at the beginning of the learning curve yet in reality the theme is getting support from the organi!ed entrepreneurs.

The banking sector has grown from a few institutions primarily involved in deposit acceptance and trade finance into a comple# multi player markets where large number of commercial banks, financial institutions and speciali!ed banks are operating with various products and activities. The banking has become a comple# 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. )lmost every bank and financial institution is involved in various functions in a dayBs job and thus re/uires a highly effective team and appropriate manpower to run the show. (orporate goals are translated into viable realities and profits only with human element that play their due role in achieving the desired results.

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Thus even the high automation would re/uire proper man behind the machine to make things happen. This idea has been reali!ed by top management in progressive banks

<ike many other organi!ed sectors, banking re/uires a multi layer manpower for its various re/uirements of professionals and support staff. The range may re/uire reasonably educated security guards on the one end and a highly educated and trained professional as head of corporate finance at the other. >ith liberali!ation of activities within the banking sector, for e#ample, more emphasis on consumer and house finance and personal loans, etc. banking has turned itself into a more market$based business where banks have e#panded their reach more to customersB door steps in a big way making banking more practical. This has further highlighted the need for proper deployment of man$power to run banks efficiently.

4or many years, HRM banks like other institutions have been handling this sensitive activity through respective personnel departments. This means human resources were managed like other physical assets e.g. pieces of furniture, calculators, e/uipment and appliances.

2ersonnel departments were primarily engaged in approval of leaves, handling of staff loans, issuance of show cause, conducting disciplinary en/uiries and termination from service.

Recruitment was a routine function and was done in a mechanical way to

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hire people with specific educational background irrespective of their real value to the institution.

0uccess stories of large banking companies have been evident of the fact that HRM is /uite different from management of physical assets. Human brain has its own peculiar chemistry.

ts strong sensory and decision$making capacity has to be greatly emphasi!ed by the employers. The work force constituting all levels of employees are constantly thinking in many dimensions.

@n the one hand it is the assigned duty and task they are to perform and for which they are paid by their employer, on the other they think of their long run goals and objectives.

By no means, their brains can be controlled to think beyond the current situation of employment. Managing this educated, skillful and trustworthy work force is not an easy job. ) few of the current challenges faced by the banking industry in terms of human resource management may be the following-

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CHABBEN2ES 5ACED @: THE @ANAIN2 INDUSTR: IN TERMS O5 HUMAN RESOURCE MANA2EMENT-

7%8. Effe#ti(e 3or9 for#e: ) time$consuming and hectic job is to hunt the right talent. ts just sitting by the river and waiting for the right fish to catch. Higher the professional value of the vacancy, tougher is the search.

dentifying 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 breads of professionals.

@nes who are outstanding professionals with high job hopping attitude $ these are those who come in $ work for some time and then leave for better prospects. @thers are those who are keenly picked$up, trained and are some how retained to be developed as future management within the bank. Management trainees are a growing popular phenomenon where freshly /ualified business graduates are engaged by banks and a certain percentage of these well e/uipped professionals stay back within the organi!ation 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 data base management problem. This has been facilitated by specialised hiring

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agencies who may take up the job of hiring in case of large number of vacancies.

7*8. Right 'eo')e: The most difficult agenda of HRM across the banking sector is to retain the right people. 0udden growth of retail banking and other services has put pressure on HR mangers 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. ) bank in a normal course invests time and money to hire and train the appropriate work force for its own operations. This ready$made force is often identified and subse/uently picked$up on better terms by others.

7,8. Com'ensation: How much to pay to the right employee and how much to the outstanding performer. Banks have traditionally followed pay scales with predetermined increments, salary slabs, bonuses and time$based fringe benefits like car and house advance, gratuity, pension, etc.

The situation is not the same anymore. )n increment of Rs1;;$6;; per annum is no more a source of attraction for a professional anymore. ) basic pay with traditional formulas of linkage with medical and other facilities has no soothing effect today.

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) promise of future growth, learning culture and corporate loyalty is out of dictionary and does not mean anything to this energetic and competent performer today.

) waiting period of ,$. years in each cadre haunts the incumbents who strongly believe in immediate compensation. There are e#amples to this. Thanks to the car financing modalities car is no more a fantasy item any more. ) freshly hired professional re/uires a brand new car or car loan on resuming office /uite contrary to his previous breed of bankers who would wait for the job seniority to /ualify for a car loan.

7.8. Co- satisfa#tion: &verybody in the bank wants to work in the preferential department, preferential location, city of his own choice and boss of his liking. )n administrative deviation from any of these results in lowered job satisfaction. )lthough hiring is normally based on regional re/uirement matching the area of activity with that of employeeBs nativity yet other elements like appointment in the department of choice and preference makes the job of HR manager /uite challenging.

>hat the HR manger cannot afford is the dissatisfied employee who not

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only disrupts the smooth working himself but also spreads the negativity to others by his de$motivated attitude.

718. Mora)e -oosting: >hat has long been overlooked is the morale boosting of the employees by the organi!ations. Human beings even if satisfied of material well being need to be appraised and encouraged constantly.

0mart banks have reali!ed this need and have taken steps to keep their work force motivated through proper encouragement like man of the month awards, repeat get$togethers, conferences, sports events, dinners, company sponsored travel, reunions, etc. This is the way employees create a feeling of belongingness.

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AN E?TRACT 5ROM A BECTURE OR2ANIDED @: THE ACADEM: O5 @ANAIN2 AND 5INANCE 5o))o3ing is an e1tra#t from a )e#ture gi(en -% Mi)os Tu#a9o(i# 3ho is the Hea, of the /ersonne) an, Training Di(ision at the H%att Regen#% Hote) in @e)gra,e" This )e#ture 3as he), in N@S an, it 3as organi4e, -% the A#a,em% of @an9ing an, 5inan#e" Milos Tucakovic, the Head of the 2ersonnel and Training Aivision at the Hyatt Regency Hotel in Belgrade, was the guest lecturer at the round table of HR managers in the banking sector, held in +B0 and organi!ed by )cademy of Banking and 4inance. Mr. Tucakovic presented his e#perience in managing human resources in the 1$star hotel, 1% percent owned by the famous 2rit!ker family and .: percent owned by domestic shareholders, to HR division managers from 0erbia's commercial banks and the central bank. )daptation of world standards to domestic conditions and local culture, main corporate culture values and personnel /uality standards re/uired in this prestigious hotel were only some of the issues addressed by Milos Tucakovic in his lecture. Human resources management, presented from the viewpoint of top$level international hotel industry, raised some new /uestions for banking sector's HR division managers who displayed interest in evaluating other managers' e#periences and possibly applying them in their future work. HR Manager, Milos Tucakovic, pointed out that the specific advantage of his hotel's forming part of a world chain of lu#ury hotels provides an opportunity for e#changing first$rate trainers and the simple option of professional training abroad. The management of the Hyatt Regency Belgrade Hotel tends to
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recruit its management personnel from the ranks of its own employees whose characteristics, work, performance and professional training demonstrate that they are ready to accept new challenges. )side from divisional training, intended for facilitating the performance of specific tasks, all employees attend a compulsory training programme in the course of which they become ac/uainted with the company and the hotel, hygiene and general work safety standards, telephone communication skills, provision of first$rate services, complaint resolution, selling skills. 0ince the Hyatt Regency Belgrade was one of the first companies in this region to invest in personnel selection and training in the modern sense, it was interesting to learn about the characteristics re/uired and developed in its personnel. HMain characteristics re/uired in all employees are energy, adaptability, communicativeness, commitment to clients9accuracy in work, honesty, team spirit, collegiality and punctuality. n addition to the foregoing, managers are re/uired to have the following skills- ability to implement changes, to make decisions, to plan and view things in the long$term, to motivate others, develop their staff, organi!e work, be ac/uainted with the market and the business environment, have the ability to solve problems and be ac/uainted with the company procedures,I Milos Tucakovic pointed out. The management and the owners of the Hyatt Regency Belgrade Hotel believe that training is a type of employee benefitG hence, in addition to various forms of training, the hotel also offers HHyattrackI, the program of independent development of managers re/uiring the candidate to e#ercise self$initiative.
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The high level of services and business practice for which the Hyatt chain of hotels is recogni!able worldwide is also maintained by means of the HMystery Cuest )uditI institution, which practically means the unannounced visit by a HphantomI guest, as this visitor is called in the Hyatt. This guest, whose identity and time of coming is not known, is a person from the company who conducts an unannounced check of compliance with standards. t should also be noted that commendations by guests are taken into account when evaluating employees, but with a view to providing an e/ual opportunity for all employees, there are always two employee recognition lists- one encompassing front$office personnel, who are in direct contact with guests, and the other one including back$office personnel whose work is also crucial for the proper functioning of the system.

The 5irst Roun,ta-)e of Commer#ia) @an9sE HR Managers The newly founded H)cademy of Banking and 4inanceI has organi!ed the first in the series of planned round tables for HR managers working in the banking industry. The meeting took place in the +B0 Jilla in Topcider on %3 0eptember with representatives of *6 commercial banks. The HR Managers were welcomed by Mr. >olfgang Rautenberg, 0enior )dviser in the +B0, and )leksandara <ujic and Kasmina Milosevic from the +B0. Mr. Rautenberg said that the )cademy, as a joint venture of the +ational Bank, commercial banks and the )ssociation of 0erbian Banks, would particularly assist in creating a joint strategy for the development of human resources in

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this field, and would also facilitate daily work for the managers taking care of the employees in the banking and finance industry. Mr. Rautenberg e#plained that the training to be offered to commercial banks would primarily insist on the &nglish language as the language of banking, on ade/uate computer literacy, communication skills and specific banking knowledge. The topics to be focused on within banking education would comprise basics of international banking and finance, interdependencies between the central bank and commercial banks, relations with international institutions and modern banking systems. n addition, special attention would be devoted to retail, corporate and investment banking, as well as mortgages and insurance business. Besides satisfaction of eventually meeting their colleagues from other banks, HR managers also e#pressed interest in e#change of e#perience, in the manner of organi!ing human resources and in education of employees in the banking industry. They also stressed the need to find out more about evaluating staff performance, efforts and availabilities and about motivation and stimulation systems in business environment. The other topics of their concern included the most reliable headhunting criteria, i.e. choice of new professionals for the bank, but also the most desirable ways of parting with employees who failed to meet the e#pectations or had to be made redundant. The need for general managers to increase their awareness of the significance of HR operations and investments in human capital was singled out as a vital aspect of the education. Mr. Rautenberg also emphasi!ed the importance of training for managers, especially with respect to managing people and organi!ations, together with
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ac/uiring international presentation skills. H t is up to you to change the image of the HR sector into what it really is L and that is much more than just administration, as it is often mistakenly thoughtI Mr. >olfgang Rautenberg underlined in his address to the commercial banks' HR managers.

The Se#on, Roun,ta-)e of Commer#ia) @an9sE HR Managers The second roundtable of banking sector human resources managers, attended by representatives of commercial banks, was held today by the )cademy of Banking and 4inance in the +B0 Jilla in Topcider. +ebojsa Kanicijevic, 2rofessor at the 4aculty of &conomics, gave a presentation on H(ontemporary Human Resources ManagementI, discussing the importance, organi!ation, place and role of the human resources management function within banks. n the course of the discussion, the participants in the roundtable emphasi!ed that the fundamental problem they face in their organi!ations on a daily basis is how to retain young /ualified personnel. n this sense, stressing the importance of training managers in contemporary management in this field, 2rofessor Kanicijevic pointed out that a basic precondition for an efficient human resources management in banks is to correct the misconceptions of bank's management, underestimating the significance of human resources, as well as to prevent the reduction of work to a mere administering of working relations and transferring responsibility to the organi!ational unit.
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HTo manage human resources means to systematically attract, use and develop personnel with a view to reali!ing the objectives of the organi!ation,I 2rofessor Kanicijevic pointed out in the course of the roundtable discussion. ARTICBE ON COR/ORATION" CASE STUD:7 WEST/AC @ANAIN2

ARTICBE WRITTEN @: SANDRA OENEIBB.

)t the Kuly meeting of the Making Mentoring (onnections +etwork, a case study of the pilot mentoring program in the >estpac Banking (orporation was presented by +iki Mesoglou, Human Resource Manager of >estpacBs 2olicy, 2rojects N Aiversity Aepartment. >estpacBs mentoring was born out of a need, e#pressed at focus groups of managers and e#ecutive managers, to e#amine career progression and to retain high potential people resources 7particularly for female staff8 within the company. There was an overwhelming response to circulation of a mentoring booklet and invitation, both from people wanting to be mentors and also from hopeful mentorees. The limited, trial nature of the pilot meant that some people had to be turned away, but they were given assurances they would be considered for involvement in such a program when it goes company$wide. The pilot included %6 mentors 7%* males, 3 females8 and %. mentorees 73 males, 6 females8. Bio$data sheets were issued and participants took part in mentoring skills workshops. These workshops were augmented, two weeks later, by a "get ac/uainted" breakfast. >estpacBs program was feedback$intensive. The breakfast, and also a mid$ point follow$up workshop with both mentors and mentorees, provided opportunities for checking reactions and progress.

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@n$going verbal and written guidance was offered by the project manager and coordinator. &very effort was made to stay in telephone contact with all participants, and their comments and input acted upon. Three sets of evaluation /uestionnaires 7at si# weeks, mid$point and project conclusion8 were also used. >estpac encountered some unwillingness on the part of some mentors to attend training. Their attitude seemed to be, " already have communication skills $ thatBs why Bm a mentor." Many satisfying outcomes of the pilot program have been observed. )lthough the >estpac culture generally e#hibits little gender bias, it was agreed that the program helped improve the visibility of women in this particular workplace. nitial career progression indications are positive with a rise noted in the number of internal job applications by participants, and this will need to be tracked over time. Mentoring relationships which cross functional areas have assisted in breaking down barriers.

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ROBE O5 @ANAS The key performance numbers that retail bank management rely on to run their franchise effectively are shifting along with wholesale changes in technology, delivery channel choices, sales strategy, segmentation, and management practices. Managing branch effectiveness has been an elusive target for many banks due to changing objectives, shifting resources, and varying tools that individual bank managers use to react to the marketplace. The traditional measures of performance that branch management has relied upon in the past are becoming invalid since they are indicators of an obsolete environment. n cases where solid management information is not available, banks manage primarily by e#perience, based on previous practices and e#isting rules. The important issues taken from this discussion are that retail management is searching for some solid ground in making management decisions, and that they do not necessarily trust their own numbers. n recent years, shifts such as the development of alternative delivery channels, customer segmentation and the resulting targeted marketing campaigns, a younger more electronic$minded customer base, and the adoption of end$to$end processing in new business to simplify sales transactions have influenced retail management. 2rojections showed that these factors would lessen the reliance on the traditional branch system to support and deliver retail performance. The thought was that by deflecting
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high$value customers to private bankers and low$value service customers to contact centers, banks would gain control of the most profitable customers. nterestingly enough, a recent Callup 2oll 7)pril %. to %3, *;;,8 finds that 6, percent of )mericans still visited their branch bank at least once a month on average over the past year. Bank changes to products, service offerings, and their approach to customer segments in general, have yet to significantly impact 7deflect8 customer behaviors. The primary responsibility of retail bank managers is to meet the service e#pectations of customers. >hile each bankBs key management numbers are uni/ue to its conditions, an e#amination of what is changing in the industry to gain competitive perspective is valuable. The Robert &. +olan (ompany conducts an annual &fficiency Ratio Benchmarking 0tudy. The results provide an e#cellent starting point in establishing directional shifts. The study e#amines differences between high$performing banks and average banks by each line of business. The *;;, study includes data from ,3 banks, thrifts and credit unions with assets between O % and O1 billion. The retail branch &fficiency Ratio is currently *5.% percent for the top$tier performers and .5.1 percent for the average of all ,3 participants. The efficiency ratio is a common banking ratio which measures the cost to generate a dollar of revenue. t is important to understand the essential factors that make a difference and try to put them into perspective. The differential is significant between the top performers and the average banks, but we must comment that a high efficiency ratio by itself for any given bank should not be viewed as an indictment of the retail management of that bank. t is often, simply, a function of the work processes, systems, policies, incentives, and marketing programs that the bank has chosen to employ. >e will e#amine the drivers beneath the key numbers to shed some light on what the new numbers mean.
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TECHNOBO2: Banks are taking a variety of approaches in implementing technology to make improvements in retail delivery. The methods differ, depending on the bank managementBs mindset toward the purpose of the software and its valued place in the new business or service delivery processes. 0ome banks are convinced that the software developers have had to consider the effectiveness issues in their design, and see little value in starting with process redesign. n those cases, the technology decision starts with a traditional approach to define business re/uirements leading to software selection and then implementation. Technology vendors prefer to install their software in the easiest and most operationally effective way possible. Jendors have become very effective in making this case. Banks have opted to design the technology implementation process around meeting the customersB needs and limiting the work effort re/uired. The challenge has been to accomplish straight$through processing in order to eliminate potential errors and work duplication. Most banks do not have an integrated technology solution. @ften in isolation, the "owners" of an element of the process make the system choices for the pieces of technology they re/uire. 4or e#ample, the loan accounting system is often in the hands of loan operations and the credit division usually makes the credit system decisions. Branch administration may decide on the document preparation system. Human Resources will drive the incentive system, but sales and marketing management develop it. The contact management system and the (RM are often the purview of marketing. ndividual system owners most often do not want to complicate the decision to ac/uire and install "their system" by including total integration of all data re/uirements in the process resulting in largely disconnected technological environments.

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4urther, technology is not often applied to simple processes that could reduce errors, cost and time. Retail banks sell 31 to 6; percent of their new products to e#isting customers. Meeping this in full view, the new business process should allow the e#isting core systems to populate the appropriate customer data whenever a customer opens a new product or service. The trend in technology is straight$through processing or electronic integration of all the re/uired data elements and support systems. ndependent surveys conducted by the Robert &. +olan (ompany reveal that many banks have this objectiveG but, to date, very few have accomplished the connectivity in an efficient or effective manner. The few banks that are integrated have lower time to close, lower cost, and better /uality of data elements. This advantage will certainly impact the amount of work that a (0R 7(ustomer 0ervice Representative8 is able to complete on a comparative basis. )n interesting discovery from the most recent +olan &fficiency Ratio Benchmarking 0tudy 7analysis completed july *;;,8 reveals that there is no correlation between a particular software system and higher retail performance. The study e#amined top$tier performers by line of business, asset si!e, and type of organi!ation, without noting any significance related to performance and system use. The conclusion is that performance is more highly correlated to the process design and integration of data systems. TEBBER E55ECTIFENESS ndustry data is best used as directional information, not as a true measure of what individual banks need to achieve to reali!e high performance. Teller effectiveness is an area where banks have gone through cycles over the past *; years. n the %:6;s, the operational focus was on security factors, including balancing. Many banks fired tellers for being out of balance. Those banks designed their transactions to include redundant steps

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to help measure and track the balancing process, including triple counting the cash back to customers, and a practice called "backing" deposit slips and9or withdrawal slips. Backing referred to writing the e#act currencies transferred on the back of the slip to potentially simplify the balancing process later in the day 7for e#ample, ten *;s, five %;s, two 1s and five s P O*31. ;;8. n these banks, the importance was on transaction accuracy. The audit department often imposed security into the processing steps without regard to timeliness and the service impact on customers. Top$tier performing banks e#amined the value of each element of transaction processing and found that the work e#pended in triple counting and backing added *; percent or more to the transaction time. They conclude that this work is not cost beneficial. The following statistics from the *;;, +olan &fficiency Ratio Benchmarking 0tudy show the range of teller performance from high$performing banks to average performers.

The data demonstrates that high$performing banks handle %, percent more transactions per month than average banks. The relative cost per transaction is ,1 percent higher in the average banks than the high$ performing banks. )lthough banks need these statistics to look at teller performance, a directional view is re/uired. &ach bank places differing process and security time burdens on the teller position. Transaction effectiveness is a significant factor, but other conditions can directly influence transaction performance. Teller performance variables can include- the impact on trainingG the teller turnover rateG the actual teller performanceG the opportunity to perform at a high rate related to staffing and schedulingG the use of part$time tellers and teller pools that can support multiple branches due to illnesses and

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vacationsG the customer base being servicedG communicationsG and, the sales referral policies and re/uirements. >ide variances e#ist in the time and effort banks put into teller training. 0ome banks provide no formal training but have tellers work with a "teller trainer" in the branch to learn the policies, procedures and systems. n these cases, the trainer will influence the procedure with their individual biases and not necessarily the bankBs standard practices. 0ome banks institute a three$week formal training process where tellers learn about the bankBs commitment to customers and how it supports the bankBs strategy. They train individual transactions in a uniform and controlled way and then, in week four, assign them a branch teller monitor to assist in getting started. The cost of effective training appears high on the surfaceG but, when management considers that more tellers interact with customers daily than any other position in the bank, it follows that service and transaction training is essential to high performance. &ffective training can cut errors and help to ensure that the speed of processing is elevated through a confident and competent staff. The annuali!ed teller turnover rate is typically one of the highest areas in a bank, ranging from the mid teens in some banks to over %;; percent in others. The national average is ,, to ,1 percent. The teller turnover rate is generally lower in a down economy. Banks that seem to have lower rates of turnover often have practices in place to reward high performance. Recruiting appropriate personnel from the branch location often helps in keeping tellers with the bank longer. +ot many banks are e/uipped to measure the actual teller performance or even relative performance within a branch or from branch to branch. @ne of the reasons is that teller opportunities to perform are not e/ual. ) drive$ up teller will usually handle more transactions per hour due to handling

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two customers at a time and a limit on transaction types. >ithin the branch, the teller at the head of the /ueue will service every customer in slow periods, where a teller at either end of the teller line will not have as many opportunities. To analy!e real teller performance, the bank would need sophisticated modeling to calculate customer arrivals during the tellersB working hours along with customers in line to determine teller opportunity. The teller position is a "customer demand" work environment and while management sometimes uses fill$in work to help the utili!ation, it typically comes down to effective staffing and scheduling. Hundreds of teller staffing and scheduling models are available in the marketplace, but currently there are three that have the features necessary to model both teller and (0R positions effectively. all three have the modeling capabilities and report generation necessary to be effective with a diverse set of branch locations. CMT, Aemos, and &#ometrics all have the re/uired /ueuing models and the fle#ibility to place staffing and scheduling in the hands of retail management. Banks must factor in tailored work standards and develop scenarios that reflect the conditions of each branch location as close as possible to reality. The fle#ibility of the model used is only one element in staffing and scheduling success. The standards and the work measured must accurately reflect the branch conditions as believed by branch management and then used to develop schedules. 0ome banks tailor standards to location$type such as urban, rural, shopping mall, university, etc. Aifferences in work are attributable to a varying mi# of transaction types due to customer base, possibly differing cashing limits for tellers due to e#perience or branch characteristics, physical location of bank checks and encoding e/uipment, and potential use of cash dispensers in some locations. Banks must account for all of these differences, as well as differences due to the actual performance of standard work. High turnover branches will have lower real
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performance due to more tellers who are in a learning curve. The learning curve for tellers is typically three monthsG and with a bank turnover rate of ,1 percent, that can lead to lower performance in selected branches. Banks can adjust the staffing model for effective service in locations with high turnover until the time that problem is resolved. 0taff modeling is a dynamic process and the tools used should be dynamic as well. True performance is difficult to measure without a tool to properly balance the customer demand to the service staff hours. n low$volume locations, it is very difficult to evaluate the performance of tellers since management must staff to volume and allow for breaks and coverage. @ften a branch re/uires the e/uivalent of between %.1 and *.1 tellers per hour in remote locations. Management may decide to utili!e three full$time tellers to allow for coverage during peaks and deliver service properly. This decision places the teller in a position where they cannot perform on the same level as a teller in a branch where customer demand is high and relatively constant. The incentive system should not penali!e them or it will force even higher turnover. n the past si# years, retail banking has e#perienced a significant shift to transform practices to primarily a sales orientation. Teller incentives are largely weighted on paying for closed referrals over and above any measure for service and productivity. This shift in many institutions has contributed to difficulty in making any comparisons. Many banks have trained their teller staff in how and what to refer with an e#pected volume of two closed referrals per day. ncentive systems can direct tellers to concentrate on referrals, which may also slow down the transaction processing and resultant service levels. The reported results from the recent +olan &fficiency Ratio Benchmarking 0tudy show that top$performing banksB branch personnel are processing %,

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percent more transactions per month than the average banks and are supporting ,: percent more deposit accounts. The factors that prevent banks from performing at the higher level relate to process efficiency, policy, deployment of staff through scheduling and staffing, and the connectivity of software. <ine of business performance is determined by how people, process and technology are deployed, not the software. CSR E55ECTIFENESS There are a variety of issues that impact the performance of (ustomer 0ervice Representatives 7(0Rs8 in the current environment. Banks have wide differences in deployment. 0ome will limit the activities of the "platform staff" to strictly new business and support service. @ther banks will view the (0Rs as part of the retail branch sales and service team, and will deploy their time to sales and service first with a component of teller support in their mi# of responsibilities. 0ome banks will establish an objective for outside sales asking (0Rs to have involvement in community functions in the sales effort, while other banks see marketing as having a primary role in driving potential customers into the branch. n any event, the key is to establish the branch objectives in line with the bankBs strategic direction. The primary activities we see (0Rs handling are sales9new business, service, branch support, and administration. 2erformance is a function of how banks manage and structure time. This is where the significance of work process has the greatest impact. ndependent studies conducted by the Robert &. +olan (ompany show that high$performing banks have a work distribution of 11 percent on sales and account opening, %6 percent on fee and non$fee services, 6 percent on customer problem resolution, and %: percent on administration and other. )verage performing banks, on the other hand, see their (0Rs spending more time in problem resolution 7*1 percent8 and less time 7,; percent8 in

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actual sales and account opening. ) factor influencing this difference in performance is that average performing bank (0Rs spend more time opening individual accounts and therefore open fewer accounts per month than the time allows. COM/ARISON @ETWEEN HI2H7/ER5ORMIN2 @ANAS AND AFERA2E /ER5ORMERS" When 3e e1amine the ,etai)s of high7'erforming -an9s (ersus a(erage 'erformers; 3e ,is#o(er a,,itiona) ,etai) on 3hat ,ri(es -ran#h 'erforman#e" The fo))o3ing is from the $GG& No)an Effi#ien#% Ratio @en#hmar9ing Stu,% retai) -ran#h ,ata.

High performing banks put on %1* new accounts per employee versus the average bankBs %,: new accounts, an increase of :.,1 percent. <ooking deeper into the data, high$performing banks open only *1 percent of new deposits to the total deposit account balances with their efforts as opposed to ,* percent for the average bank. >hen we further dissect the information, we see the new non$time deposit account balances as a percentage of total non$time deposit balances was %. percent in top$tier banks versus *; percent on average. These measures support the conclusion that the high performing banks do not need to open as much in new deposit balances since they retain their e#isting deposits better than the average banks. >hat are the underlying factors that might support this outcomeQ They are likely the focus on new business in average performing banks versus the focus on net new business in high$performing banks. The emphasis on developing a sales culture has made a dramatic impact on many banks. n some cases, it has literally transformed the retail banks from "order takers" to "business development" engines. (0Rs have had their offerings e#pand to include insurance, investment and select deposit
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products. t can be difficult to train (0Rs in the relative benefits of each vehicle and often the weight of the incentive to the product drives them, not the need. +ot every bank has e#perienced the same success in terms of this change translating directly to the bottom line. >hen banks e#amine the incentives that are paid to (0Rs there are a couple of telling characteristics to look for. Many banks base incentives on the first sale, meaning banks are paying for every new account regardless of how it was sold. The customer could have been inclined to set up the account prior to walking into the branch, or the (0R could have sold the account based on its features. 0uccessful banks establish both branch and individual sales thresholds before incentives are earned. ) second element to consider is what the bank is strategically trying to achieve$net new business. n many of the campaigns and programs, booked new business is the only criteria, not what it has achieved in terms of net bottom line. The subliminal message is that servicing e#isting customers is not as important to achieving individual or bank goals leading to service time spent on difficulties booking new business correctly and not primarily servicing e#isting customers. +ot every bank or branch location has the same potential for growth in their marketplace, so they should model each location on its individual characteristics and opportunity for growth. The development of e#cellent market data has greatly assisted the banks who understand where to place their sales and service emphasis. 0egmentation of the market is significant since it is not so much a measure of the actual effort as where the effort is e#tended. Today over .;; (RM models are on the market, and the tools are more affordable with greater applications. Aeployment is as much a part of the success of the tools as it is with any technology. @ften the marketing teams concentrate on a

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specific use and not on developing market intelligence. 4or e#ample, the data may help banks to determine which customers have a product, but unless they understand why the customer has that product, they may miss a targeted marketing opportunity. The reason may be due to the specific product offering which may not convert to an interest in other product offerings. )pplying science and analytics to the data suggests that the most pertinent information will lead to selling new products to e#isting customers. This analysis also applies to the possible loss of customers. n this way, banks may prevent the attrition of their customer base. Banks that see a gap in their product offering often rush to put together a campaign before understanding the potential customer acceptance and impact on e#isting work processes. @ften this happens with H&<@( campaigns and the (0Rs cannot meet customer service e#pectations. This is an e#ample of short$ term application with a potentially long$term strategic tool. The work processes are as significant to the overall time success as any factor in the performance e/uation. Many new business processes are burdened at the point of the (0R, with too many unconnected information inputs. )s mentioned earlier, it is common that 31 percent to 6; percent of new sales are due to e#isting customers, but ironically, processes are not structured to take advantage ofthat information in an automated way. @ften banks profess to have their process integrated, but rather have a series of largely manual steps. 4or instance, they take an application for a retail loan and submit it for credit approval. t is common to find that the input form or screen for credit differs from the loan application, thus re/uiring a separate input. >hen the loan is approved, there is a separate input form or screen for document preparation. n many cases, the (0R needs to prepare a separate document

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to show that they have properly completed an assessment of the customerBs full investment, loan and deposit account needs with an entirely separate input form and screen. )fter the loan is approved, a separate incentive form or screen may need to be completed. <astly, separate boarding documents get the loan booked on the accounting system. &very step in the process may be thought of as employing technology, but without integration, it re/uires multiple inputs of the same information. ) significant portion of (0R effectiveness is in the details of the process. The staffing and scheduling element has as much to do with success in (0R effectiveness as with teller effectiveness. Banks should utili!e the proper information to determine how many (0Rs are deployed, and see that they have the right tools and products to be successful. =nfortunately, very little science has been applied to the (0R position in banks, and this is where the sales service face is presented to the customer and potential customer base. SUMMAR: The findings noted here from the *;;, +olan &fficiency Ratio Benchmarking 0tudy should not be surprising to most bankers since the behavioral basis today is basically the same in the top$performing banks as it has been for decades. >hat makes the difference between the top$ performing retail banks and the average performers is the way they design and deploy their resources to achieve sales and service goals for their customers. The numbers tell a story over time. The comparative gap in efficiency ratio between the top performers, *5.% percent, and the average bank, .5.1 percent, is significant at *;.. percent. nterestingly, of the *;.. percent gap, the personnel cost gap is %; percent and the other operating e#penses is %;.. percent.

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The ways people, processes and technology are designed, integrated and deployed make the difference. The analysis conducted in the annual +olan study of the top$performing banks year after year shows that improvements are ongoing$thai is what makes a single target elusive. The key to success is to understand that policy, process, technology and deployment should be the source of your measures and the basis for your improvement opportunities.

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