Performance assessment in banks & NBFCs: Panel recommends 360-degree feedback

Says 'Chief Learning Position' to be created in all commercial banks

A report by a Reserve Bank of India (RBI) panel has said 360-degree feedback is important for a transparent and comprehensive performance assessment exercise, one that ensures adequate performance differentiation between employees.

In its report, the central bank’s committee on capacity building in banks and non-banking financial entities said posts of chief learning officer should be created in commercial banks, adding those appointed to such posts should develop a ‘learnability index’, a measure of an individual’s ability to learn. This would be applied as an input to judge “promotability”, disseminate knowledge across the organisation and monitor and augment learning and sharing, it said.

LEARNING: NO FULL STOP HERE

Some key recommendations:

• Create the position of “chief learning officer”, responsible for leadership development and collaborative learning in commercial banks
• Banks should endeavour to expand enrolment of select internal employees as part-time faculty to provide internal support for training initiatives
• To deal with talent replacement, there should be free movement of talent within the organisation for creation of a larger workforce of trained personnel
• Job rotation, especially in PSBs, should not be carried in a mechanical manner but through a well laid down criterion
• All banks may adopt e-learning methods and ensure that function-specific lessons are made available to its staff
• Conducting a common Banking Aptitude Test (BAT) at entry levels.

“Bankers will need to specialise in different business functions, while maintaining basic general competency. Banks need to identify five-six such tracks within which the staff can be groomed,” the report said.

The panel also suggested a stronger and more competitive human resource framework for the overall skill development of banks and non-banking financial entities regulated by RBI.

The committee was set up with the objective of implementing non-legislative recommendations of the Financial Sector Legislative Reforms Commission (FSLRC) related to capacity building in banks and non-banking financial companies (NBFCs), streamlining training intervention and suggesting changes to address the increasing challenges in these sectors. The committee is chaired by G Gopalakrishna, former executive director of RBI.

The panel was also tasked with evolving an appropriate certification mechanism for training by examining possible incentives for undertaking certification programmes and covering all levels — from the lowest rung to the board-level.

The committee made exhaustive recommendations, after examining feedback from the banking sector and inputs from member-experts, academicians and various training/consulting institutions. In its report, it spoke about entry-point qualifications at the recruitment stage and the development of competency standards and certification/accreditation in various areas of training. It also recommended a common banking aptitude test at entry levels.

On capacity building, the report said banks should strive to expand the enrolment of select internal employees as part-time faculty to provide adequate internal support for training initiatives. “In the event of a talent crunch at middle or senior management levels, banks may consider the possibility of outsourcing various training activities, including management of their training institutes,” it said.

The committee added banks must avoid transfers for the sake of preset norms. “Job rotation in banks especially public sector banks, should not be done in a mechanical manner, but through well laid-down criteria,” it said.

It also suggested ways to address replacement of talent within banks. The panel said the lack of replacement talent was one of the biggest challenges, adding to address this, banks should develop an internal expert pool and allow free movement of talent within the organisation.

The committee has sought suggestions and comments on the recommendations by October 31.