CHAPTER-I

INTRODUCTION AND RESEARCH DESIGN

1.1INTRODUCTION:-

Any organisation or business unit needs employees to look after different activities. This is called Human
Resources. Such human resource need to be developed fully so that it will make positive contribution for the
progress and prosperity of a business or organisation unit. For systematic development and management of
human resources is necessary.

Human Resources Management Deals with :-

a) Training
b) Self-Development
c) Promotions
d) Performance appraisal of manpower recruited in an organisation

Human Resource Management is an organized learning experience aimed at matching the organisational needs
for career growth and development. It is a process involving series of learning activities designed t acquire
desired level of learning of competence among employee. Human resource Management is a continuous process
and it needs money. Such investment creates a team of efficient skilled and trained manpower which bring lots
of opportunities and stability. Human Resource Management programme offers long term benefits to an
Organisation. Human Resource Management has been overlooked in Nationalized Bank. With growing
realisation of proper Human resource Management in bank , It has grown into an important activity. Human
Resource Management has been an important member in banks in senior terms. Although the idea is new for
many banks where there is beginning of the learning curve. Yet in reality the theme is getting support from the
organised bank taking bank sector in consideration it has grown from function of accepting deposit and trade
finance into complex multiplayer market where large number of commercial , financial institution and
specialised bank are operating various product and activity within the financial market linked directly or
indirectly within an overall growth of nation and its impact as an integral part regional segment of a global
banking environment.

Almost every bank and financial institution is involved in day to day job and thus require a highly effective
team and appropriate man power to run the show

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1.2SIGNIFICANCE:-

This project is completely based on the strategy i.e. global strategy of HRM with reference to nationalised bank.
For banking, the importance of human resource management has grown manifold because the nature of banking
industry, which is mainly service based. The management of people in the organization along with handling the
financial and economic risks at the wider level is the most potent challenges in front of the banking industry in
any given time frame. Efficient and skilled manpower in the sector can only manage the financial risks that the
banks need to take on regular basis. The Human Resource department is responsible for finding such talented
manpower and placing them in right jobs in the banks.

Apart from the risks in the banking sector, the people handling the day to day affairs in the banks need to keep
the customer satisfaction in mind. The people working at the front office become the face of the bank and thus it
is the responsibility of the HR to make sure there are eligible people working up front. They need to make sure
that the candidates selected in the banks go through necessary training before they begin their work, so that they
are aware of the nuances of the core banking industry and customer relationship, better. The HR management
needs to think both about the quantity and quality requirement in the banking sector and deal with the shortage
in the skilled manpower supply in the sector efficiently.

1.3OBJECTIVES OF THE STUDY:-

Following are the objectives of the project-

 To understand various strategy of HRM in private and nationalised banks.

 To study the benefits of Human Resource Management in private and nationalised banks.
 To study effectiveness of HRM in banking.
 To understand various techniques in improvement in HRM strategy.
 To understand various types of HRM strategies in private and nationalised banks.

1.4RESEARCH METHODOLOGY:-

The present study will make use of both primary and secondary data sources

Primary Data

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Primary data will be collected through a well designed questionnaire. It will be emailed or sent in physical form
to the HR manager of Nationalised banks.

Sample Size-

4-5 respondents will be selected at random for sampling.

Secondary Data

Secondary information will be collected from various published and unpublished sources. It is essential for
better understanding of the issues involved.

Secondary data includes

 Annual reports of nationalised banks

 Magazines
 Media Articles
 Official website of respective banks.

1.5SCOPE & LIMITATIONS OF THE STUDY:-

The scope and limitations of the present study are as follows-

 Primary data will be collected from 6 banks. (3 nationalised banks and 3 private)
 The secondary data used in the project is limited to last 6 years. (2013-2018)
 Study will focus only on banks operating in India.

1.6LITERATUREREVIEW:-

Anupama Gupta (2010)1described the challenges faced by Human Resources manager in context of new
economic scenario. This paper emphasized that these challenges should be taken care of. Main challenge is the
shortage of skilled manpower. This paper examined the role of HR department to tackle the problem. It was the
duty of HR department to design a possible career path to retain talent. It was suggested that HR manager
should be ready to handle the challenges but the role of other stakeholder should also be included in order to
ensure healthy survival of the organization

Jain RavindraandR.premkumar (2010)2 in hititiyis article on “Management styles, productivity and

adpatiblity of HR. “An Empirical study” explained the relationship between management styles and

3
productivity of Human Resources. This study explained the extent to which management style are practiced in
Indian organization across public sector and private sector enterprises. The author had measured the impact of
management style on HR productivity and HR adaptability. This study is exploratory in nature.

Som (2008)3studied the role of innovative HRM practices and their impact on enhanced corporate performance
during the change process. The results found that innovative recruitment and compensation practices have
positive significant relationship with firm performance. It was also observed that HR department seems to be the
most important factor for enhancing corporate performance in the context of economic liberalization. This study
holds importance because liberalization created competition and adoption of innovative HRM practices are
important for increase in corporate performance.

Bjorkman and Budhwar (2007)4in his research entitled ―Human resource management and the performance
of foreign firms operating in India‖ reviewed the relationship of HRM and the performance of foreign firm
operating I India by taking 76 subsidiaries of overseas firms operating in India. The results highlighted that
introduction of HRM practices form foreign patent organizations is negatively associated with performance and
local adoption results in positive association with the performance of foreign firms operating in India. The
findings asserts that HRM practices do improve the organizational performance in Indian subsidiaries of foreign
firms if localization of HRM implemented as people belong to local areas are more sensitive toward their
culture and environment.

Pereira (1985)5 studied Larsen and Tourbo’s (L & T), human resource development system. L & T introduced
an integrated human resource development system before 1985. He traced process and history of human
resource development system (HADS) and changes in it. They covers performance appraisal, training and
organizational development. He pointed out that HRD department is now separated from the personnel
department, critical attributes required for the job have been identified and the organization is heading towards
the establishment of potential appraisal system.

Keye (1984)6 studied relationship between performance appraisal and career development and shown that both
performance appraisal and career development have potential for developing human resources; potential that
can be increased by linked them together to meet the needs of the both individual employees and the
organizations

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Economic survey (1994)7 state that human development is the ultimate goal of our development programmes
and is also crucial for development of social sectors, such as education and health, is crucial for sustaining
higher rates of overall economic growth in an increasingly integrated world economy.

Rao (2003)8 state in his another study that Indian organizations seem to have played only lip sympathy to
human resource development as (i) they do not follow the structure principles, (ii) very few have feedback and
counseling system (iii) no separate potential appraisal system and (iv) mostly do not have full time human
resource development facilitator.

Dixit (2009)9 assessed human resource development practices in urban cooperative banks in Pune district based
on manpower planning, performance potential appraisal, training, career planning, organizational development,
rewards, employee welfare, quality of working life and human resource information for 9 co-operative banks at
top, middle and lower level. This is comprehensive and empirical study. Study used comparative approach and
suggested transformational model.

Jains (2012)10 paper based on a doctoral dissertation, assess the impact of the reform program on PSB from
1991 to 2008 on HRM practices. Data was collected through questionnaire and interview. Secondary data was
collected from database available with RBI in the form of annual report, publication from IMF and bank of
international settlements and working papers by various banks published from time to time

1.7CHAPTER SCHEME:-

Tentative Chapter Scheme is as follows-

Chapter Particulars
I Introduction And Research Design
II Evolution and Development of Human Resource Management
III Overview Of HRM In Nationalised and private sector Banks
IV Data analysis
V Summary , major observation, conclusion

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REFERENCE:-

1)Anupama Gupta(2007) ― Retailing Human Resource Challenges Ahead, Synthesis 5(2), July, pp. 102-107.

2)JainRavindra& R. Premkumar (2010), ―Management Styles, Productivity and Adaptability of Human

Resource: An Empirical Study‖, The Indian journal of Industrial relations, vol.46, no-2, Oct-. Pp 328-343.

3)Som,(2008), ―Innovative Human Resource Management and corporate performance in the context of
economic liberalization in India‖, International journal of Human resource management, vol. 19 no. 7, july
2008, pp. 1279-1297.

4)Bjorkman, Ingmar and Budhwar, (2007), ―Human resource management and the performance of foreign
firms operating in India‖, Employee relations journal, vol. 29 no. 6 pp. 595-610. 2007

5)Pereira (1985)., ‘The brave new world of HRM: Human resource management in the digital age’, , 1985
6 )Keye (1984) ., ‘Strategic human resource development\, first edition, , 1984, PP. 173-327
7 )Economic survey (1994) Government of India, ‘Economic survey:1993-94,’ finance Ministry, New Delhi,
1994, PP. 146-147
8 )Rao, T.V., ‘Human resource development future’, Macmillan India Ltd., New Delhi, 1st Edition, 2003, pp.
48-64.
9 )Dixit Neha Bharat, ‘Human resource development practices in urban cooperative banks in Pune district’,
unpublished Ph.D. thesis, University of Pune, 2009..
10) Jain Shikha, ‘Human resource management in Public Sector Bank, in Studies in Business Practices
Journal of Commerce and Management Thought’, 2012, PP. 104-117

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 CHAPTER-II

Evolution and Development of Human Resource Management

2.1Development of HRM

In fact, the seed of HRM were sown during the industrial revolution 1850s in Western Europe and USA. The
wind gradually reached to India as well in the beginning of twentieth century. Since then to the present era, the
development of HRM may be classified as follows:

2.1.1Trade Union Movement Era:

The conditions of workers in the aftermath of factory system as an outcome of industrial revolution were very
pathetic. The First World War further worsened their conditions. This was the period when state intervention to
protect the worker s interest was felt necessary.

The Royal Commission of Labour in India (1911) under the chairmanship of J H, Whitley recommended the
abolision of the ‘jobber’ system and the appointment of labour officers in industrial enterprise to perform the
recruitment function as well as to settle the worker’s grievances. Also, workers started forming their
associations which was subsequently known as ‘trade unions’ to improve their lots. Trade Union Act, 1926 was
passed in India.

The basic philosophy underlying trade unionism was to safeguard the worker’s interest and to sort out of their
problems such as use of child labour, long hours of work and poor working conditions. These unions used
strikes, slowdowns walkouts picketing, boycotts, and sabotage as weapons for the acceptance of their problems.

These activities of trade unions gave rises to personnel practices such as collective bargaining, grievance
handling system, arbitration, disciplinary practices, employee benefit programmes, installation of rational and
defensible wage structures .

2.1.2Social Responsibility Era:

In the starting decade of 20th century, some factory owners/employers started showing humanistic approach
towards the workers. Robert Owen, a British industrialist towards workers. He viewed that the principal social
and economic environments influence the physical mental and psychological development of workers.
Therefore, in order to improve the productivity, it is necessary to improve, conditions of employees by
removing them from an adverse environment or by changing the environment with the provisions of more
satisfactory living and working conditions.

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The philosophy underlying in Owen’s paternistic approach was that worker’ is just like a child and owner is just
like a father. Therefore, the owner should take care of a worker just like a father takes care of his child.
Accordingly, Owen himself implemented this philosophy in his cotton mill at Scotland by introducing facilities
such as shower baths and toilets in the factory premises, model villages for workers, raising minimum wage of
employment of child labour to 11 years and reducing working hours from 12 to 10 hours.

Owen also appealed to other industrialists to introduce the similar facilities in their factories. However, some
critics view that, in the event of increasing trade unionism in factories, factory owners adopted these facilities to
control over the labour problems and unrest. According to them, adoption of such practices was a compulsion
for factory owners rather than their paternistic philosophy.

2.1.3Scientific Management Era:

The concept of scientific management was introduced by Fredrick Winslow Taylor’ in the USA early in the
20th century as an alternative to the prevailing system of management by initiative and incentive.

Based on his shop floor job experience, Taylor developed four principles of scientific management:

1. Development and use of scientific methods in setting work standards, determining a fair day’s work, and best
way of doing work.

2. Scientific selection and placement of workers best suited to perform the various tasks and provision of their
training and development for maximum efficiency.

3. Clear cut division of work and responsibility between management and workers.

4. Harmonious relations and close cooperation with workers to secure performance of work in accordance with
the planned jobs and tasks.

In his scientific theory, Taylor viewed man/worker as one driven by fear of hunger and search for profit.
Accordingly, if economic reward is tied up with the efforts put on the job, the worker will respond with his
maximum physical capability. Taylor’s study is limited to the physical characteristics of the human body as it
responds to routine and to clearly defined jobs.

He visualized man functioning as an “appendage to the industrial machine”. Realizing that with physical efforts,
human body can get tired and thus, can affect worker’s performance both in quantity and quality, Taylor
developed several techniques to introduce his scientific ideas in management.

The following are the important techniques developed by him:

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1. Time study to analyze and measure the time taken in doing the various elements of a job and to standardize
the operations of a job.

2. Motion study involving close observation of the movements required to perform a job with a view to
eliminate wasteful motions and decide on the best way of doing the job.

3. Standardization of tools, equipment’s and machinery and working conditions.

4. Incentive wage plan with differential piece rate of wages for efficient and inefficient workmen.

The main contribution of Taylor to management was it led to professionalization of management and human
engineering. However, some critics criticize his views on the ground that its focus was more on technology and
not on human factor in industry.

2.1.4Human Relations Era:

By 1920, it was felt that earlier approaches to human resource management were incomplete as these did not
recognize workers as human beings having their feelings, attitudes and needs. It was between 1925 and 1935;
many experts expressed their opinions towards the human aspects of organisational activities.

A psychologist namely Hugo Munsterberg in his book “Psychology and Industrial Efficiency” suggested the use
of psychology in selection, placement, testing and training of employees in an organisation. Elton Mayo and his
associates conducted a series of experiments from 1924 to 1932 at the Hawthorne plant of the Western Electric
company in the USA.

The main findings of the Hawthorne Experiments were as follows:

1. Physical environment at the work place do not have any material impact on the efficiency of work.

2. Favourable attitudes of workers and work-team towards their work were more important factors determining
efficiency.

3. Fulfillment of the worker’s social and psychological needs had a beneficial impact on the morale and
efficiency of workmen.

4. Employee groups based on social interactions and common interests exercised a strong influence on worker’s
performance.

5. Workers cannot be motivated solely by economic rewards. More important motivators are job security,
recognition, right to express their opinion on matters related to them.

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Based on these findings, the researchers developed a human relations approach to HRM. It was based on the
view that the modern organisation is a social system in which the social environment and inter-personal
relations govern the behaviour of employees.

The relationship between the superiors and subordinates should relate to the social and psychological
satisfaction of the employees. In ultimate sense, the objective of human relations approach was to make
employees productive and it was realized that employees’ satisfaction is the best means of making the employee
productive.

2.1.5Behavioral Science Era:

We have just seen that human relations era assumes that a happy worker is a productive worker. As a corollary
to this, the behavioral science era assumes human behavior as a means to achieve efficiency in performance.
Behavioral approach to HRM is based on the findings of intensive research carried out by behavioral scientists
belonging to the disciplines of sociology, social psychology, anthropology and management experts.

The major contributions made by the behavioral scientists are in the areas of motivation, leadership,
communication, organisational change and development, organisational culture, and individual and group
dynamics On the whole, behavioural science approach of HRM was concerned with the social and
psychological aspects of human behaviour in organisations.

Some of the important elements of the behavioural approach of HRM are outlined below:

1. Individual behaviour is linked with the group behaviour. For example, a person be inclined to resist to change
has behaviour as an individual. But, he/ she will readily do so if the group to which he/ she belongs, decides to
change its behaviour.

2. Informal leadership rather than the formal leadership of manager is more effective in influencing people to
achieve standards of performance. From this viewpoint, democratic leadership style of the manager is more
acceptable to the subordinates and hence, more effective.

3. By nature, people do not dislike work. Most people enjoy work and are motivated by self- control and self
development. In fact, job itself is a source of motivation and satisfaction to employee.

4. Expanding subordinate influence, self- control and self- direction can improve operating efficiency.

2.1.6Systems Approach Era:

A system may be defined as a set of interdependent parts forming an organised unit or entity. The system is
defined as “an organised and complex whole: an assemblage or combination of things or parts forming a

10
complex unitary whole.” The parts, also known as subsystems, interact with each other and are subject to
change. These sub-systems are inter-related and interdependent.

Any working organisation usually consists of the following three broad sub-systems:

1. Technical Sub-system, i.e., formal relationships among the members of an organisation.

2. Social Sub- system, i.e., social satisfaction to the members through informal group relations.

3. Power Sub-system, i.e., exercises of power or influence by individual or group.

The interaction of the various sub-system forms the total system. There is also interaction between total
system/sub-systems and environment. Environment itself may influence or be influenced by the system or sub-
system.

The system approach is characterized by the following features:

1. A system is a group of inter-related elements which are separate entities/units.

2. All the elements are inter-related in an orderly manner.

3. There is the need for proper and timely communication to facilitate interaction between the elements.

4. The interaction between the elements should lead to achieve some common goal.

2.1.7Contingency Approach Era:

Contingency refers to die immediate circumstances. Contingency approach believes that there is no one way of
managing that works best in all situations. According to this approach, the best way to manage varies with the
situation. Hence, this approach is also called ‘situational approach’.

There may not be one universal way of managing in all situations. A particular approach may yield fruitful
results in one situation but may drastically fail in other situations. Therefore, it is imperative for managers to
analyse different situations and then use the best approach best suitable in that particular situation. This can be
understood better by an example of the recurrent problem of how to improve productivity.

The solution to this problem can be prescribed as follows:

Scientific Management Approach:

Prescribe work simplification and additional incentives.

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2.1.8Behavioural Approach:

Recommend job enrichment and democratic participation of employees in the decision- making process.

2.1.9Contingency Approach:

Offer a solution which is responsive to the characteristics of the total situation faced. The above solutions may
be suitable to different situations. As regards work simplification, it would be ideal where there is a limited
resource, unskilled labour and limited training opportunities available.

Job enrichment would be ideal for that organisation where there are abundant skilled labour forces. Thus, this
clearly shows that management function depends upon given situations present in an organisation. Managers are
supposed to systematically diagnose a given situation and then find out solutions to meet the situation.

In short, contingency approach of management and for that matter HRM emphasizes on two points:

1. It focuses attention on situational factors that influence managerial decision.

2. It highlights the need for developing skills for managers in situational analysis.

Ideas like contingency were also expressed by Mary Parker Follett (1865-1933) way back during 1920s. She
was greatly interested in social work and had a gift for relating individual experience to general principles. Her
concept of the Law of the Situation referred to the necessity of acting in accordance with the specific
requirements of a given situation.She noted that these requirements were constantly changing and needed
continued efforts to maintain effective working relationship F.W. Taylor also emphasized the importance of
choosing the general type of management best suited to a particular case.

Similarly Henry Fayol emphasized the point that there is nothing rigid or obsolete in management efforts. Thus,
it is clear that contingency approach is not new, but h has been expanded in the modem times. This is the
modem recent approach in management and for that matter in HRM as well.

HRM has a humble beginning in India in 1920s. By now, this concept has blossomed into a matured subject and
profession. VenkataRatnam and Srivastava have outlined the evolution and development of HRM in India as
shown in table 3.1

Period Development Emphasis

1920s-1930s Beginning Statutory ,welfare, paternalism
1940s-1980s Struggling for recognitition Managerial
1990s Promising Executive
Source- https://www.wikipedia.org/

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2.2Advancing the HR Profession in India:

The SHRM sponsored EIU study is titled Global firms in 2020 – The next decade of change for Organizations
& workers. Most respondents shared is that they expect globalization to have the biggest impact (positive or
negative) on their organization. 47% believe that economic opportunities for their organization over the next 10
years are greater in India than China.

Wherever globalization is discussed and debated one common theme does emerge the shifting talent equations.
As boundaries dissolve developed markets decelerate and emerging markets rise – talent is the single most
impact asset. As the world’s economy shifts its business focus to developing economies like Brazil, India and
China at the heart of this focus lies India with its vast workforce and demonstrated capabilities in the services
sector. The talent base that is latent in India continues to increasingly attract the attention of global MNCs. This
entails that the role of the Indian HR professional is undergoing a drastic shift and operates with different
perspectives as compared to the past.

Increasingly it is imperative to simultaneously enable global integration and local responsiveness. This will
involve managing diverse workforces (multi cultural, multi generational and gender) ensure scalability of talent,
integrate multigenerational workforce prepare for evolving workplaces (multi location, virtual) and balance
multiple priorities between business performance, growth and developing social responsibility and building
sustainable organizations

2.3Society for Human Resources management:

Globally as well as in India SHRM has evolved in initiatives and activities that focus on knowledge
enhancement and scalability of the HR professionals to enable them to work more closely with the leadership
teams as business partners.

For example, SHRM has partnered American Institute of Research to asses the state of HR education across
universities. One of the key findings was that the students were concerned to find job posts as an HR, their
qualification and their perceptions was that HR needs to increase its influence within organizations. This sets up
the agenda for SHRM to sharpen the focus of the value that HR brings to the organizations.

One way of sharp focusing was to introduce certification as a process to ensure higher standards. One of the
ways in which SHRM India provides the focus is by providing Global Certification in HR.

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HR certification demonstrates mastery of the HR body of knowledge and is widely accepted as a symbol of
professional achievement. It is a career long commitment that shows that as an HR professional one has
mastered the core HR principle and has remained dedicated by staying current in the profession. It is an
achievement that opens doors to a new level of responsibility and endless opportunities. Each level of
certification proves the mastery of essential skills and knowledge in the Humans resources profession.

The philosophy underlying in Owen’s paternistic approach was that worker’ is just like a child and owner is just
like a father. Therefore, the owner should take care of a worker just like a father takes care of his child.
Accordingly, Owen himself implemented this philosophy in his cotton mill at Scotland by introducing facilities
such as shower baths and toilets in the factory premises, model villages for workers, raising minimum wage of
employment of child labour to 11 years and reducing working hours from 12 to 10 hours.

Owen also appealed to other industrialists to introduce the similar facilities in their factories. However, some
critics view that, in the event of increasing trade unionism in factories, factory owners adopted these facilities to
control over the labour problems and unrest. According to them, adoption of such practices was a compulsion
for factory owners rather than their paternistic philosophy

2.4 Factors Responsible for the Slow Growth of Human Resource Management in India

The following factors are responsible for the slow growth of human resourcemanagement in India:

Factors

Late arrival of the Factory System:

Human resource management is conditioned by industrial development. In India, modern industry started with
the development of the railways. Even after the progress of industry, human resource management was unheard

It was the Royal Commission of Labour which recommended in 1931, the appointment of labour officers to deal
with the recruitment of labour and to settle their grievances.

Thus, the slow growth of human resource management in India can be linked to the late arrival of large scale
industry.

Low Status of the Industrial Worker:

The Indian worker in the early days of industrialisation was found to be illiterate. But over the years, the profile
of the industrial worker has changed. Now, his status is enhanced. As a result, the handling of labour has
become more professionalised.

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Professionalisation of Human Resource Management:

A professional subscribes to certain ethical standards. He is more loyal to the profession than to the employer.

With the emergence of professional personnel managers, the growth of human resource management has
accelerated. A professional has knowledge and judgment, which he uses to make his decision.

Adequate Benefits:

He is not controlled and directed by his employer. Thus, professionalisation makes a business enterprise more
efficient, dynamic and socially responsible.

The growth of personnel management education in India has contributed to professionalisation of human
resource management.

2.5Social Responsibilities of Business:

Employees should be treated as human beings and their co-operation must be achieved for the realisation of
organisational goals. The business should fulfill the following obligations towards its employees.

Fair Wages:

Business should pay reasonable salaries so that its employees may lead a good life and satisfy their needs.

Employees should be provided benefits like housing, insurance cover, medical facilities and retirement benefits.

Good Working Conditions:

Good working conditions are necessary to maintain the health of the workers. Therefore they must be provided
with good working conditions.

Opportunity for Growth:

Business should give the employees opportunity to develop their capabilities through training and education.

Recognition of Worker’s Rights:

The business should recognise the worker’s right to fair wages, to form trade unions, to collective bargaining
etc.

Co-operation:

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The business must win the co-operation of workers by creating the conditions in which workers are willing to
put forward their best efforts towards the common goals of the business.

Therefore business organizations made a conscious attempt by contributing to the well-being and upliftment of
the community in which they were located.

Change of Government’s Attitude:

The relationship between the state and the economy has a chequered history since the days of the planner
economist, Adam Smith.

During the time of Adam Smith, the doctrine of laissez faire was widely accepted as the guiding principle of
economic activity.

The state was expected to concern itself only with problems relating to law and order. It scrupulously avoided
any interference in the working of private business.

Laissez faire was the era of free enterprises. The doctrine of laissez faire was based on the assumption “that
every individual acting as a rational being tries to get the greatest satisfaction from life for himself and in the
process contributes towards the greatest possible satisfaction to society”.

Thus, the classical economist fondly believed that the principle of non-interference with the economic and
business matters led to “the greatest good of the greatest numbers”.

Prior to independence, the British government followed a laissez-faire attitude to labour-management relations.

But after independence, the national government pledge d to establish a welfare state. The government therefore
enacted many laws for the benefit of the workers.

According to an SHRM sponsored study conducted by the Economic Intelligence Unit (EIU) India’s total labor
force in 2020 is estimated to be 602 million, almost 4 times that of the US at the same time India’s rapid growth
has elicited a range of reactions from world economies and organizations – from cautious optimism to
unequivocal conviction that this is the market to focus in the future,

What does this mean? This means that organizations have a bigger, far more challenging task in the areas of
employability of this workforce. It also means shaping this huge potential into sustainable talent that
organizations can hire and transform into business drivers. This by far will be the biggest challenge faced by the
HR community. Their level of readiness to face this challenge is what must be developed

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2.6HRM in present day

The present day human resource management concept includes the following activities:

1. Human Resource Planning. It means determining the number and type of personnel required to fill the vacant
job positions of an organisation.

2. Employing people, i.e., recruitment, selection, and placement of personnel.

3. Career growth, i.e., training and development of employees

4. Performance appraisal including feedback.

5. Motivation by offering financial and non-financial incentives.

6. Compensation or remuneration of employees keeping in mind their qualifications and other factors.

7. Providing social security and welfare of people.

8. Review and audit of personnel policies and procedure.

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 CHAPTER-III

Overview Of HRM In Nationalised and Private Sector Banks

3.1HUMAN RESOURCE MANAGEMENT IN BANKS

The Classification of the Indian Banks into broad groups such as public sector,
old private sector, new private sector, foreign, regional rural banks and cooperativesare largely on the basis of
ownership pattern. It is also well known that
the business mix, delivery channels and IT strategies of these organizations varysubstantially. What is little
known but of greater importance is that each of these banks follows very distinct HR practices
which have contributed, substantially, to the business processes.

3.2HUMAN RESOURCE MANAGEMENT IN PUBLIC SECTOR BANKS

In the recent times, the contours of HR function in public sector banks are
slowly but definitely changing. One could say that these banks are discovering the HRfunction and it is hoped
that these banks will fast catch up with others. It may berecalled that, in a controlled environment and to meet
with the rapid branchexpansion since 70s- Public Sector Banks (PSBs) have adopted HRM practicessimilar to
that of Government departments. Herein HRM did not have a direct rolein business development but was more
concerned with centralized recruitment tostaff and providing them across the country.

3.3HUMAN RESOURCE MANAGEMENT IN PRIVATE SECTOR BANKS

The HR function has practiced by private banks is effectively involved in theidentification of specific skills that
each job warrants and recruiting suitable staff by every way possible. In these banks, recruitment is a continuous
process with astrong focus on getting the right person for the right job by offering appropriatecompensation,
incentives and designation. There is a great energy spent in keepingthe turnover low and offering appropriate
training inputs. Possibly there are asmany pay structures as there are employees. More importantly, HRM has a
role inmonitoring and mentoring the employee. There are no routine transfers.
Rather people are recruited in different geographical locations and different levels.Technology has helped in
centralizing the back office and other functions such thatservice can be provided from a distance. These
institutions adopt a
proactive performance appraisal system but still short of 360 Degree appraisals. Theirtraining process is
concerned with both skill building and motivating. It should,however be said that the demand for professionals

18
on account of growth of Indian Business is such that the efforts of HRM have not helped it from completely
staving off staff turnover in the ranks.

3.4CHALLENGES

HRM is an essential source for growth oriented and dynamic organizations, which want to succeed in a fast
changing competitive environment. The fundamental principle of HRM is to treat people as a valuable asset
rather than a liability and a mere factor of production. Although Information Technology is taken to a large
extent as a substitute for human resources but it should be taken only an aid to human efforts and not as a
substitute. The present position of HRM in banks demands, appropriate human resource strategies, policies and
practices to achieve organizational goals. Thus, it is pertinent to place the right person on the right job and at the
right time also and then evaluate his/her performance against the predetermined goals of the organization. The
present situation demands that the men employed in the banking organizations, work with full commitment,
devotion and discipline. It is very significant for human resource professionals to understand various changes
taking place in the organization and adapts human resource activities accordingly. While making human
resource strategies, the following broader issues should be considered:

• Optimizing staff level and skills

• Building the right skills and work culture

• Managing individual performance to achieve the goals ofthe bank.

These issues are of paramount importance. In the post-reforms period, implementation of VRS made the banks
globally competitive by introducing latest technology. Due to this scheme, less skilled employees are retrenched
with liberal schemes. This surplus labor with inappropriate skills negatively affects the performance of bank and
hence, reduces profitability resulting in poor reputation of the banks in the market. The reduction in the number
of employees due to the VRS was known as downsizing of employees. This was due to transformation, which
resulted in the use of more and more technology and hence retrench the extra i.e. disguised labor, which
otherwise contributed to increase in the labor cost. No doubt, due to VRS, fear ofjob insecurity has increased
and motivation level among the employees has decreased, but it can be made different by making proper
strategies to introduce VRS in a friendly manner.

3.5THE ADVANCING AGE: A CHALLENGING TASK

The advancing age of public sector banks (average of 40 to 45 plus) is also a matter of concern due to their
mental and physical tiredness. The private sector, foreign banks are applying the 10 rule to get rid of unfit or

19
under/non-performers. The public sector banks should also devices a mechanism so that only the best are
recognized, rewarded and retained. Although, the 10 per cent formula may have its demerits or may not fit in or
be applicable as such in public sector banks, yet there should be some check on the non-performers and sum
encouragement to the performers. The other way to overcome this problem is to recruit young and energetic
specialized personnel The new employees help to infuse fresh ideas so that organization’s intellectual capacity
and the ability to respond to the changing environment remains in time with physical growth. It has been rightly
said: “we are trying to apply third generation ideas on second generation organizations which are unfortunately
run by first generation managers.” When it comes to managing people in organizations, the traditional Managers
mindset stands in the way. Unless the attitudes are changed to suit third generation organization, it will not lead
to organizational effectiveness and the mismatch between theory and practice will be perpetuated.

3.6INNOVATIONS AND CREATIVITY

Considering innovation as a way of life, the bank should take steps for creating an atmosphere of innovation and
creativity: Thus, the need of the hour is to establish Research & Development (R & D) department, which is
non-existent in the banks till today. This is a necessity in the changed environment to let the banks
modify/update their HRM and business strategies. Some organizations have their own R & D departments,
which are continuously and rigorously engaged in market study and advising new competitive products to the
management. In fact, nowadays, no firm can remain in the market and maintain its market share without
introducing new produced in the market and that too at competitive prices. Banks are no exception to this. We
should focus to create a pool of leaders who have a wide vision and a capacity to do miracles for the
organization. The banks should focus on the creation of an intellectual resource base within the organization.

3.7COMPENSATION SYSTEM

There is an urgent need for a system of reward and compensation that attracts, recognizes and retains the talent
that is commensurate with performance and skills. There should be a psychological contract between the
employer and employee for full utilization of human resources. It is human tendency to get something in return
of work done or contribution made. The total involvement of employees is necessary for an organization to be
an effective enterprise. Vision and mission will not become a reality without the involvement and integration of
employees. A sense of belonging and commitment to the organization is a must for facing the challenge. The
reward, recognition and incentives for performance send right signal for job satisfaction, moral boosting and
building commitment, setting a new land-mark in public sector banks in the country SBI has launched the
incentives scheme for high performing employees which ) > can be pursued by other public sector banks also.
The compensation system of the public-sector banks should be made at par with those of the new private sector
and foreign banks with proper weightage, viz, special increments and scale up gradation to the professionally

20
qualified employees having MBA, FCA, CA, IT and Ph.D degrees. If the public sector banks are to develop and
maintain their competitive edge, the potential value of the employees needs to be increased by enhancing their
skills and capabilities in tune with the market. This a necessary because the business shares of public sector
banks is decreasing year after year.

Unfortunately, one notices a large measure of irrationality and inconsistency in the management of industrial
conflicts in the banking industry as elsewhere. The core activity of industrial relations is at the lowest level in
the organization -the branch, the department etc. The day-to-day operational issues in enforcement of discipline
and resolution of employee grievances therefore, need to be handled at this level. However, the branch
management and the regional management providing support to the branches often suffer from various
handicaps. They may not have sufficient information and training in the effective ways of dealing with
grievances and indiscipline. Hence, they may train themselves to look for expedient short-term solutions to
problems rather than opting for solutions involving difficulties, which may be necessary in the long-term
interests of the organization. Branch management behavior in the area of industrial relations is characterized by
fear, distrust and hatred in relation with employees and trade )i unions.

Similarly, at the regional and zonal levels, issues of union recognition, promotions, transfers, etc., increasingly
tend to remain unresolved for long periods and then are taken to government agencies such as courts. This trend
is probably an indication of the syndrome of distrust, hatred and fear at the branch level. In addition, middle
management comes under pressure from the branches as well as from top management which are interested in
resolving conflicts expeditiously regardless of the long-term liabilities generated by such quick resolution of
conflicts. At the top level, the management often indulges in actively playing and supporting political games for
organizational survival and maintaining people’s status and power. Managers willing to take hard decisions in
long-term organizational interest are frustrated either because of an absence of a clear policy at the top level or
top management’s tendency to support only expedient decisions convenient for maintaining immediate
continuity ofwork. Decisions made by branch managers are changed or reversed by top management to maintain
an equation with a convenient union or under pressure from powerful politicians.

In this background, and basic HRM task in banks is to make a sustained effort to develop the Managers
resources at all levels towards an effective understanding and management of industrial conflicts and union-
management relations. A sufficient understanding of the alternative methods of dealing with industrial relations
problem among ground-level managers is, therefore, a vital part of HRD in industrial relations. An effective
training effort in this area should be an inevitable component of management development at the branch,
regional and top levels. One hopes that such training is not regarded as a luxury or hard-core bankers often
interpret reflection of management fashion as training. Ideally, therefore, the HRD effort in industrial relations
should cover all those people who contribute to the reality ofindustrial relations within the organization and its
21
effect on performance. It is encouraging to observe that some trade unions of bank Officers spend considerable
time and resources to help their members to develop commitment to organizational goals as well as to social
responsibility accompanying union rights and privileges.

3.8LAWS

The field of human resources management is greatly influenced and shaped by the state and federal laws
governing employment issues. Indeed, regulations and laws govern all aspects of human resource
management—recruitment, placement, development, and compensation.

One of the most important pieces of HRM legislation, which affects all of the functional areas, is Title VII of
the Civil Rights Act of 1964 and subsequent amendments, including the Civil Rights Act of 1991. These acts
made illegal the discrimination against employees or potential recruits for reasons of race, color, religion, sex,
and national origin. It forces employers to follow—and often document—fairness practices related to hiring,
training, pay, benefits, and virtually all other activities and responsibilities related to HRM. The 1964 act
established the Equal Employment Opportunity Commission to enforce the act, and provides for civil penalties
in the event of discrimination. The net result of the all-encompassing civil rights acts is that businesses must
carefully design and document numerous procedures to ensure compliance, or face potentially significant
penalties. Another important piece of legislation that complements the civil rights laws discussed above is the
Equal Pay Act of 1963. This act forbids wage or salary discrimination based on sex, and mandates equal pay for
equal work with few exceptions. Subsequent court rulings augmented the act by promoting the concept of
comparable worth, or equal pay for unequal jobs of equal value or worth.

Other important laws that govern significant aspects of labor relations and human resource management include
the following:

Davis-Bacon Act of 1931—This law requires the payment of minimum wages to nonfederal employees.

The Norris-Laguardia Act of 1932—This law protects the rights of unions to organize, and prohibits employers
from forcing job applicants to promise not to join a union in exchange for employment.

The Wagner Act of 1935—This law, also known as the National Labor Relations Act, is the main piece of
legislation governing union/management relations, and is a chief source of regulation for HRM departments.

Social Security Act of 1935—This law was enacted in order to protect the general welfare by establishing a
variety of systems to assist the aging, the disabled, and children.

The Walsh-Healy Public Contracts Act of 1936—This law was designed to ensure that employees working as
contractors for the federal government would be compensated fairly.

22
Fair Labor Standards Act of 1938—this important law mandated employer compliance with restrictions related
to minimum wages, overtime provisions, child labor, and workplace safety.

Taft-Hartley Act of 1947—This law created provisions that severely restrict the activities and power of labor
unions in the United States.

Landrum-Griffin Act of 1959—Also known as the Labor-Management Reporting and Disclosure Act
(LMRDA), the Landrum-Griffin Act deals primarily with the relationship between a union and its members.
This law grants certain rights to union members and protects their interests by promoting democratic procedures
within labor organizations.

Age Discrimination in Employment Act of 1967—This legislation, which was strengthened by amendments in
the early 1990s, essentially protects workers 40 years of age and older from discrimination.

Occupational Safety and Health Act of 1970—This act, which established the Occupational Safety and Health
Administration, was designed to force employers to provide safe and healthy work environments and to make
organizations liable for workers' safety. Today, thousands of regulations, backed by civil and criminal penalties,
have been implemented in various industries to help ensure that employees are not subjected to unnecessarily
hazardous working conditions.

Family and Medical Leave Act of 1993—This law was passed to provide employees who qualify with up to 12
work weeks of unpaid, job-protected leave in a 12-month period for specified family and medical reasons. It
also requires group health benefits to be maintained during the leave as if employees continued to work instead
of taking leave. The Act became effective on August 5, 1993 and applies to companies who employ 50 or more
people.

The network of state and federal laws that exist to regulate employment and labor relations is extensive. In
many cases, rules only apply to firms with a specified minimum number of employees and thus do not regulate
small companies. But, other regulations apply to all employee/employer relationships, regardless of enterprise
size

3.7Functions of HRM

Human Resources management has an important role to play in equipping organizations to meet the challenges
of an expanding and increasingly competitive sector. Increase in staff numbers, contractual diversification and
changes in demographic profile which compel the HR managers to reconfigure the role and significance of
human resources management.

23
The functions are responsive to current staffing needs, but can be proactive in reshaping organizational
objectives. All the functions of HRM are correlated with the core objectives of HRM . For example personal
objectives are sought to be realized through functions like remuneration, assessment etc. HR management can
be thought of as seven interlinked functions taking place within organizations, as depicted in Figure below.
Additionally, external forces—legal, economic, technological, global, environmental, cultural/geographic,
political, and social—significantly affect how HR functions are designed, managed, and changed

1)Strategic HR Management:

As a part of maintaining organizational competitiveness, strategic planning for HR effectiveness can be

increased through the use of HR metrics and HR technology. Human resource planning (HRP) function
determine the number and type of employees needed to accomplish organizational goals. HRP includes creating
venture teams with a balanced skill-mix, recruiting the right people, and voluntary team assignment. This
function analyzes and determines personnel needs in order to create effective innovation teams. The basic HRP
strategies are staffing and employee development.

2). Equal Employment Opportunity.

Compliance with equal employment opportunity (EEO) laws and regulations affect all other HR activities.

3)Staffing:

The aim of staffing is to provide a sufficient supply of qualified individuals to fill jobs in an organization. Job
analysis, recruitment and selection are the main functions under staffing. Workers job design and job analysis
laid the foundation for staffing by identifying what diverse people do in their jobs and how they are affected by
them. Job analysis is the process of describing the nature of a job and specifying the human requirements such
as knowledge, skills and experience needed to perform the job. The end result of job analysis is job description.
Job description spells out work duties and activities of employees. Through HR planning, managers anticipate
the future supply of and demand for employees and the nature of workforce issues, including the retention of
employees. So HRP precedes the actual selection of people for organization. These factors are used when
recruiting applicants for job openings. The selection process is concerned with choosing qualified individuals to
fill those jobs. In the selection function, the most qualified applicants are selected for hiring from among the
applicants based on the extent to which their abilities and skills are matching with the job

4)Talent Management and Development:

Beginning with the orientation of new employees, talent management and development includes different types
of training. Orientation is the first step towards helping a new employee to adjust himself with the new job and
the employer. It is a method to acquaint new employees with particular aspects of their new job, including pay
24
and benefit programmes, working hours and company rules and expectations. Training and Development
programs provide useful means of assuring that the employees are capable of performing their jobs at acceptable
levels and also more than that. All the organizations provide training for new and inexperienced employee. In
addition, organization often provide both on the job and offthe job training programmes for those employees
whose jobs are undergoing change. Likewise, HR development and succession planning of employees and
managers both are necessary to prepare for future challenges. Career planning has developed as result ofthe
desire of many employees to grow in their jobs and to advance in their career. Career planning activities include
assessing an individual employee’s potential for growth and advancement in the organization. Performance
appraisal includes encouraging risk taking, demanding innovation, generating or adopting new tasks, peer
evaluation, frequent evaluations and auditing innovation processes. This function monitors employee
performance to ensure that it is at acceptable levels or not. This strategy appraises individual and team
performance so that there is a- link between individual innovativeness and company profitability. Which tasks
should be appraised and who should assess employees’ performance are also taken into account.

5. Total Rewards:

Compensation in the form of pay, incentives and benefits are the rewards given to the employees for
performing organizational work. Compensation management is the method for determining how much
employees should be paid for performing certain jobs. Compensation affects staffing and in the matter of
staffing; people are generally attracted to organizations offering a higher level of pay in exchange ofthe work
performed. To be competitive, employers develop and refine their basic compensation systems and may use
variable pay programs such as incentive rewards, promotion from within the team, recognition rewards,
balancing team and individual rewards etc. This function uses rewards to motivate personnel to achieve an
organization's goals of productivity, innovation and profitability. Compensation is also related to employee
development in the matter of compensation; it provides an important incentive for motivating employees to
higher levels of job performance in the organization. Benefits are another form of compensation to employees
other than direct pay for the work performed. Benefits include both legally required items and those offered at
employer’s discretion. Benefits are primarily related to the area of employee maintenance as they provide for
many basic employee needs.

6)Risk Management and Worker Protection-

HRM addresses various workplace risks to ensure protection ofworkers by meeting legal requirements and
being more responsive to concern for workplace health and safety along with disaster and recovery planning.

7)Employee and Labor Relations:

25
The relationship between managers and their employees must be handled legally and effectively. Employer and
employee rights must be addressed. It is important to develop, communicate and update HR policies and
procedures so that managers and employees alike know what is expected.

Unfortunately, one notices a large measure of irrationality and inconsistency in the management of industrial
conflicts in the banking industry as elsewhere. The core activity of industrial relations is at the lowest level in
the organization -the branch, the department etc. The day-to-day operational issues in enforcement of discipline
and resolution of employee grievances therefore, need to be handled at this level. However, the branch
management and the regional management providing support to the branches often suffer from various
handicaps. They may not have sufficient information and training in the effective ways of dealing with
grievances and indiscipline. Hence, they may train themselves to look for expedient short-term solutions to
problems rather than opting for solutions involving difficulties, which may be necessary in the long-term
interests of the organization. Branch management behavior in the area of industrial relations is characterized by
fear, distrust and hatred in relation with employees and trade )i unions.

26
 CHAPTER-IV

The Study Of HRM in Banks

4.1 Introduction

To understand HRM formulation and implementation in bank a set of questionnaire was prepared . Set of
questionnaire was mailed to HR managers. Following were the response of HR managers.

4.1.1Age

Question about their age was asked to them and following are the results

Age Group Frequency Percentage

25-35 1 20
35-45 3 60
45 & above 1 10
Total 5 100
Table-4.1.1 Age
Source- primary data

70
60%
60

50

40

percentage
30

20% 20%
20

10

0
25-30 35-45 45&above

Graph-4.1.1

27
From above date we understand that we can understand that 60% are between 35-45 age as followed by 25-30 age and
20% are 45 and above

4.1.2Qualification
Question about qualification was asked. The result was as follows

Education Frequency Percentage

Graduate 2 40
Post graduate 2 40
Specialized course 1 20
Total 5 100
Table 4.1.2 Qualification
Source-primary data

Percentage
45
40% 40%
40

35

30

25
20%
20

15

10

0
Graduate post Graduate specialised course

Percentage

Graph4.1.2
From above table and graph we can understand that 40% are graduate,40% are post graduate as
follows by 20% specialised course

28
4.1.3Recruitment;
Which kind off employee does bank look for?
Types Frequency Percentage
Fresher 2 40
Experienced 3 60
Total 5 100
Table 4.1.3recruitment
Source-primary data

percentage
70

60
60%
50

40
40%
30

20

10

0
Fresher Experienced

percentage

From above table we can understand that company hire 40% fresher as followed by 60% experienced.

29
4.1.4Observation;
Most commonly how much period is taken for observation of employee progress?
Period Frequency Percentage
6 months 1 20
A year 2 40
More than year 2 40
Total 5 100
Table 4.1.4 observation
Source-primary data

percentage
45
40% 40%
40

35

30

25
20%
20

15

10

0
6 months A year more than year

percentage

From above table we understand that mostly HR observe employee for year or more than yea

4.1.5Extra ciricularactivites
Which extra circular activities does employee likes most
Types Frequency Percentage
Sports 1 20

30
Outing 1 20
Others 3 60
Total 5 100
Table 4.1.5 extra ciricularactivites

percentage
70
60%
60

50

40

30
20% 20%
20

10

0
sports outing others

percentage

Above data states that most employee are interested in other activities. 20% like outing and 20% like sports.

4.1.6Office ambiance
Which factors help employee to work and give its performance at its best
Types Frequency Percentage
Office atmosphere 1 20
Proper salary 2 40
Other 2 40
Total 5 100
Table 4.1.6 office ambiance

31
 percentage
45
40% 40%
40

35

30

25
20%
20

15

10

0
office atmosphere proper salar other

percentage

From above data we can understand that proper salary are most priority to emoployee as followed to office
atmosphere . Other factors are observed 40%

4.1.7Loyality
Does loyality of a employee depends on how their basic need is respected?

Opinion Frequency Percentage

Agree 4 80
Disagree 0 0
Neutral 1 20
Total 5 100
Table 4.1.7 loyality
Source- primary data

32
 percentage
90
80%
80

70

60

50

40

30
20%
20

10
0
0
Agree Disagree Nutral

percentage

From above data we can understand that 80% agree with loyality of a employee depends on how their basic
need is respected. While 20% are neutral

4.1.8Extra benefit
Does extra benefit given to an employee always helps for their moral upgradation
Answer Frequency Percentage
Yes 3 60
No 1 20
Maybe 1 20
Total 5 100
Table 4.1.8 extra benefit
Source –primary data

33
 percentage
90
80
80

70

60

50

40

30
20
20

10
0
0
yes no Maybe

percentage

From above data we can understand that 80% agree that extra benefit given to an employee always helps for
their moral upgradation

4.1.9Interview
Which type of interview helps to know much about candidate applying for?
Type Frequency Percentage
Group discussion 1 20
Personal interview 3 60
Aptitude 1 20
Total 5 100
Table 4.1.9 interview
Source- primary data

34
 Series 1
70
60%
60

50

40

30
20% 20%
20

10

0
grouop discuusion personal interview aptitude

Series 1

personal interview helps to know much about candidate applying,while 20% agree with group discussion and
20% aptitude

35
 CHAPTER-V
Summary,Major observation, Conclusion

5.1SUMMARY

Human resource management (HRM) has long been overlooked in the corporate sector in the country where a
small section, comprising mostly the multi-national companies was practising the same.

With the growing realization of proper HRM in the corporate sector, it has grown into an important activity.
Now the head of HRM is an important member of the senior teams of any thriving business.

Although 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 organized entrepreneurs.

The banking sector has grown from a few institutions primarily involved in deposit acceptance and trade finance
into a complex multi player markets where large number of commercial banks, financial institutions and
specialized banks are operating with various products and activities.

The banking has become a complex 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.

Almost every bank and financial institution is involved in various functions in a day's job and thus requires a
highly effective team and appropriate manpower to run the show. Corporate goals are translated into viable
realities and profits only with human element who play their due role in achieving the desired results.

Thus even the high automation would require proper man behind the machine to make things happen. This idea
has been realized by top managements in progressive banks.

Like many other organized sectors, banking requires a multi layer manpower for its various requirements of
professionals and support staff. The range may require reasonably educated security guards on the one end and a
highly educated and trained professional as head of corporate finance at the other.

With liberalization of activities within the banking sector, for example, more emphasis on consumer and house
finance and personal loans, etc. banking has turned itself into a more market-based business where banks have
expanded their reach more to customers' 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.

36
For 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, equipment and appliances.

Personnel departments were primarily engaged in approval of leaves, handling of staff loans, issuance of show
cause, conducting disciplinary enquiries and termination from service.

Recruitment was a routine function and was done in a mechanical way to hire people with specific educational
background irrespective of their real value to the institution.

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

Its strong sensory and decision-making capacity has to be greatly emphasized by the employers. The work force
constituting all levels of employees are constantly thinking in many dimensions.

On 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. A few of the current challenges faced by the
banking industry in terms of human resource management may be the following:

Effective work force: A time-consuming and hectic job is to hunt the right talent. Its just sitting by the river and
waiting for the right fish to catch. Higher the professional value of the vacancy, tougher is the search.

Identifying 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.

Ones 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. Others 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 qualified business graduates are
engaged by banks and a certain percentage of these well equipped professionals stay back within the
organization 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 agencies who may take up the job of hiring in case of large number of vacancies.

37
38