The branch manager of a public sector bank was critically injured in a road accident on his way to office. He was taken to a nearby medical centre and was shifted to a specialist hospital at the insistence of the bank's top management. His bosses also wrote to the manager's family promising all help.
The manager took about a month to recover and the first thing he did after rejoining work was to express his gratitude to his employers for standing by him during a stressful period. The next thing was to send the hospital bill to the accounts department for approval. But his request was rejected on two grounds: one, an officer of his rank wasn't entitled to the level of expenses incurred; and two, exceptions are made only for accidents that occurred during office hours. In this case, the accident took place 15 minutes before the office hours.
The branch manager is now busy attaching the top management's get-well-soon and all-help-assured messages to his rejoinder to the accounts department's bombshell. In the process, he is the latest to join a growing list of executives who firmly believe that human resource management in India's public sector banks is nothing but an exercise in filling up forms in triplicate, throwing the antiquated rule book at employees, and keeping track of leave records. In this particular case, it was shoddy execution of a well-intended move by the bank's top management.
The CEO of a human resources (HR) consulting firm says he dropped the idea of responding to a tender document issued by a leading public sector undertaking (PSU) bank for the appointment of an outside HR consultant after he went through the details. For, 28 of the 30-page document was all about the procedure to submit a Rs 10-lakh demand draft along with the application, the terms of rejection of applications, the detailed timetable for disbursing funds, and how the consultancy firm must, at all times, keep at least three assistant general managers and two deputy general managers informed about everything and seek their prior written sanction to access any information it might need. The actual work the bank wants to get done in 18 months was dismissed in just two pages.
And all these HR disasters are taking place at a time that has been described by Reserve Bank of India Deputy Governor K C Chakravarty as a "retirement decade" for PSU banks. According to a report by McKinsey, 60 to 90 per cent of the deputy general managers/general managers at PSU banks are set to retire by 2016-17. This number could jump to 93 to 100 per cent by 2020. PSU banks are aware of this data that indicate a wafer-thin leadership pipeline, partly caused by the freeze on recruiting probationary officers through the 1990s.
The most obvious solution is to bring in experience and specific skill sets through lateral recruitment. But look at the track record. Lateral recruitments accounted for just two per cent of all the employments in PSU banks in 2012-13. In comparison, close to 53 per cent of the hiring in private sector banks came through lateral recruitments.
Adequate remuneration is just one part of the problems. The other is the mindset. One PSU bank filled up 50 of its technical posts with internal candidates in the ratio of 1:75, that is, 75 candidates were called for interviews for every one post. This is all fine, except that the interview panel did not have a single technically qualified person.
The other problem is the pace and quality of recruitment. A study by the Boston Consulting Group (BCG) says while in private and foreign banks, the growth in employees is in sync with their balance sheet, public sector banks have increased their manpower by a meagre growth rate of 0.5 per cent to achieve a balance sheet growth rate of 22 per cent.
But it's exactly the opposite when it comes to employee cost. In 2010, for the first time, the average cost per employee in the public sector surpassed that of the private sector. The average cost per employee within the public sector is Rs 5.6 lakh per annum, higher than the private sector average of Rs 5.3 lakh. So, the challenge is huge - the need to induct talent in large numbers and contain staff costs. The cost structure of public sector banks, BCG says, varies significantly from that of the private sector. About 62 per cent of the costs of public sector banks comprise employee costs as compared to 37 per cent in the private sector due to various factors including outsourcing, variable pay, and so on.
The final challenge relates to the need to teach new practices while "unlearning" long-standing practices that are no longer a best practice. While past business models were founded on a predominance of back office skills, the new business model, enabled by new technology, requires additional skills to be devoted to sales and customer service. This can only be done by re-skilling existing employees.
A retired chairman and managing director says if an officer has 20 years of experience in a public sector bank, it's actually one year's experience repeated 20 times. Time for a reboot?
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