PSBs to go for succession planning, variable pay

Public sector banks (PSBs) may soon introduce a system of succession planning for critical and leadership positions. This will be backed by three potential successors in the reserve, as the finance ministry has accepted the recommendations of the A K Khandelwal committee on HR issues in state-run banks.

A common pool of general managers is proposed to be created for the entire banking industry, with only identified potential candidates becoming eligible for the positions of executive director and chairman and managing director. Besides, banks may consider variable pay as a major component of wages -- and secure the option to switch to a cost-to-company concept as followed in many private companies.

The finance ministry has asked the banks to prepare a human resource plan on the basis of the recommendations, and got it approved by their respective board of directors by December 31 this year. It sought comments from the Indian Banks Association (IBA) on some of the recommendations by November 30, 2011. IBA will constitute a committee of three chief managing directors to examine it.

Among other proposals, PSBs will carry out detailed and structured manpower planning exercise every year for a time spectrum of five years, linking it with strategic and business plans. They can also seek the advice of outside experts.

It has been suggested that banks outsource more and more non-core activities in a time-bound manner. Also, the standard of recruitment, including methodology and content for testing, has to be raised. Testing of computer skills will be mandatory for both officers and clerks. The minimum qualification requirement for clerks and sub-staff is proposed to be graduation and Class 10, respectively.

Fresh recruitment of clerks will be restricted to rural and semi-urban branches. It will be mandatory for them to complete three years of rural and semi-urban postings within the first 10 years. To encourage clerks to rural areas banks will have to provide incentives such as special house rent and fast-track promotion.

Officers in specialised areas such as information technology, risk management, human resources, treasury, marketing and law (at the level of assistant general manager, deputy general manager and general manager) may be taken either from other banks on deputation or from the open market on contract basis for a minimum period of five years. Banks have also been asked to introduce a performance management system to promote a high performance culture.