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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 resources is variously defined in political economy and
economics, where it was traditionally called labor, one of three factors of
production. Its use within corporations continues to define common conceptions of
the term.
Modern analysis emphasizes 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
civilization. The broad term human capital has evolved to contain the complexity
of this term, and in macro-economics the term "firm-specific human capital" has
evolved to represent the original meaning of term "human resources".
at providing conflict-free
operations
throughout the
organization. It also keeps plans ready to deal with problems like absenteeism,
turnover, low productivity or industrial disputes.
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architecture evolved in the late 1980s, every single HR automation process came
largely in form of mainframe computers that could handle large amounts of data
transactions. In consequence of the high capital investment necessary to purchase
or program proprietary software, these internally developed HRMS were limited
to medium to large organizations being able to afford internal IT capabilities. The
advent of client-server HRMS authorized HR executives for the first time to take
responsibility and ownership of their systems. These client-server HRMS are
characteristically developed around four principal areas of HR functionalities: 1)
"payroll", 2) time and labour management
4) HR management.
The payroll model: automates the pay process by gathering data on employee
time and attendance, calculating various deductions and taxes, and generating
periodic pay cheques and employee tax reports. Data is generally fed from the
human resources and time keeping modules to calculate automatic deposit and
manual cheque writing capabilities. Sophisticated HCM systems can set up
accounts payable transactions from employee deduction or produce garnishment
cheques. The payroll module sends accounting information to the general ledger
for posting subsequent to a pay cycle.
The time and labour management module: applies new technology and
methods (time collection devices) to cost effectively gather and evaluate employee
time/work information. The most advanced modules provide broad flexibility in
data collection methods, as well as labour distribution capabilities and data
analysis features. This module is a key ingredient to establish organizational cost
accounting capabilities.
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healthcare provider, insurance policy, and pension plan to profit sharing or stock
option plans.
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make things happen. This idea has been realized by top managements in
progressive banks.
Like many other organized sectors, banking requires 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.
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
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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 forces 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.
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(3) Compensation:
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. An increment of Rs500-800 per annum is
no more a source of attraction for a professional anymore. A basic pay with
traditional formulas of linkage with medical and other facilities has no soothing
effect today.
A 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.
A waiting period of 3-4 years in each cadre haunts the incumbents who strongly
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believe in immediate compensation. There are examples to this. Thanks to the car
financing modalities car is no more a fantasy item any more.
A freshly hired professional requires a brand new car or car loan on resuming
office quite contrary to his previous breed of bankers who would wait for the job
seniority to qualify for a car loan.
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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(2)
(3)
(4)
There is a need for well trained officers to deal with high net worth
individuals where continuity and close knowledge of customer is
important. In the circumstances an important task at hand is training the
staff member, who, on account of age profile is not comfortable
working in an IT environment. HRM should also take immediate steps
to improve productivity. There is a simultaneous need to balance the
demand of IT savvy youngsters joining the organization who ask for
high salaries.
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Aside 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 acquainted with the company and the hotel, hygiene and
general work safety standards, telephone communication skills, provision of firstrate services, complaint resolution, selling skills.
Since 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 required and developed in its personnel.
Main characteristics required in all employees are energy, adaptability,
communicativeness, commitment to clients/accuracy in work, honesty, team spirit,
collegiality and punctuality. In addition to the foregoing, managers are required 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, organize
work, be acquainted with the market and the business environment, have the
ability to solve problems and be acquainted with the company procedures, Milos
Tucakovic pointed out.
The management and the owners of the Hyatt Regency Belgrade Hotel believe that
training is a type of employee benefit; hence, in addition to various forms of
training, the hotel also offers Hyattrack, the program of independent
development of managers requiring the candidate to exercise self-initiative.
The high level of services and business practice for which the Hyatt chain of
hotels is recognizable worldwide is also maintained by means of the Mystery
Guest Audit institution, which practically means the unannounced visit by a
phantom 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.
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It should also be noted that commendations by guests are taken into account when
evaluating employees, but with a view to providing an equal 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.
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ARTICLE ON CASE
CORPORATION.
STUDY- WESTPAC
BANKING
TECHNOLOGY:
Banks are taking a variety of approaches in implementing technology to make
improvements in retail delivery. The methods differ, depending on the bank
management's mindset toward the purpose of the software and its valued place in
the new business or service delivery processes.
Some 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. In those cases, the technology decision starts with a traditional
approach to define business requirements leading to software selection and then
implementation. Technology vendors prefer to install their software in the easiest
and most operationally effective way possible. Vendors have become very
effective in making this case. Banks have opted to design the technology
implementation process around meeting the customers' needs and limiting the
work effort required. 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. Often in isolation, the
"owners" of an element of the process make the system choices for the pieces of
technology they require. For example, 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
CRM are often the purview of marketing. Individual system owners most often
do not want to complicate the decision to acquire and install "their system" by
including total integration of all data requirements in the process resulting in
largely disconnected technological environments.
Further, technology is not often applied to simple processes that could reduce
errors, cost and time. Retail banks sell 65 to 80 percent of their new products to
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existing customers. Keeping this in full view, the new business process should
allow the existing 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 required data elements and support systems. Independent surveys
conducted by the Robert E. Nolan Company reveal that many banks have this
objective; 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 quality of data elements. This advantage will
certainly impact the amount of work that a CSR (Customer Service
Representative) is able to complete on a comparative basis. An interesting
discovery from the most recent Nolan Efficiency Ratio Benchmarking Study
(analysis completed july 2003) reveals that there is no correlation between a
particular software system and higher retail performance. The study examined
top-tier performers by line of business, asset size, and type of organization,
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.
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TELLER EFFECTIVENESS:
Industry data is best used as directional information, not as a true measure of
what individual banks need to achieve to realize high performance. Teller
effectiveness is an area where banks have gone through cycles over the past 20
years. In the 1980s, 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 to help measure and track
the balancing process, including triple counting the cash back to customers, and a
practice called "backing" deposit slips and/or withdrawal slips. Backing referred
to writing the exact currencies transferred on the back of the slip to potentially
simplify the balancing process later in the day (for example, ten 20s, five 10s,
two 5s and five Is = $265. 00). In 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 examined the value of each element of transaction
processing and found that the work expended in triple counting and backing
added 20 percent or more to the transaction time. They conclude that this work is
not cost beneficial. The following statistics from the 2003 Nolan Efficiency Ratio
Benchmarking Study show the range of teller performance from high-performing
banks to average performers.
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Teller performance variables can include: the impact on training; the teller
turnover rate; the actual teller performance; the opportunity to perform at a high
rate related to staffing and scheduling; the use of part-time tellers and teller pools
that can support multiple branches due to illnesses and vacations; the customer
base being serviced; communications; and, the sales referral policies and
requirements.
Wide variances exist in the time and effort banks put into teller training. Some
banks provide no formal training but have tellers work with a "teller trainer" in
the branch to learn the policies, procedures and systems. In these cases, the
trainer will influence the procedure with their individual biases and not
necessarily the bank's standard practices. Some banks institute a three-week
formal training process where tellers learn about the bank's commitment to
customers and how it supports the bank's 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 surface; 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. Effective
training can cut errors and help to ensure that the speed of processing is elevated
through a confident and competent staff.
The annualized teller turnover rate is typically one of the highest areas in a bank,
ranging from the mid teens in some banks to over 100 percent in others. The
national average is 33 to 35 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.
Not many banks are equipped to measure the actual teller performance or even
relative performance within a branch or from branch to branch. One of the
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reasons is that teller opportunities to perform are not equal. A drive-up teller will
usually handle more transactions per hour due to handling two customers at a
time and a limit on transaction types. Within the branch, the teller at the head of
the queue will service every customer in slow periods, where a teller at either end
of the teller line will not have as many opportunities. To analyze real teller
performance, the bank would need sophisticated modeling to calculate customer
arrivals during the tellers' 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
utilization, 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 CSR positions effectively. all three have the modeling
capabilities and report generation necessary to be effective with a diverse set of
branch locations. GMT, Demos, and Exometrics all have the required queuing
models and the flexibility 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
flexibility 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. Some banks tailor standards to location-type such as urban, rural,
shopping mall, university, etc. Differences in work are attributable to a varying
mix of transaction types due to customer base, possibly differing cashing limits
for tellers due to experience or branch characteristics, physical location of bank
checks and encoding equipment, 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
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have lower real performance due to more tellers who are in a learning curve. The
learning curve for tellers is typically three months; and with a bank turnover rate
of 35 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. Staff 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. In 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. Often a branch requires the
equivalent of between 1.5 and 2.5 tellers per hour in remote locations.
Management may decide to utilize 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 penalize them or it will force even higher turnover.
In the past six years, retail banking has experienced 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 expected volume of two closed referrals per day. Incentive
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 Nolan Efficiency Ratio Benchmarking Study
show that top-performing banks' branch personnel are processing 13 percent
more transactions per month than the average banks and are supporting 39
percent more deposit accounts. The factors that prevent banks from performing at
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the higher level relate to process efficiency, policy, deployment of staff through
scheduling and staffing, and the connectivity of software. Line of business
performance is determined by how people, process and technology are deployed,
not the software.
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CSR EFFECTIVENESS
There are a variety of issues that impact the performance of Customer Service
Representatives (CSRs) in the current environment. Banks have wide differences
in deployment. Some will limit the activities of the "platform staff" to strictly
new business and support service. Other banks will view the CSRs 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 mix of responsibilities.
Some banks will establish an objective for outside sales asking CSRs 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. In any event, the key is to establish the branch objectives in line with the
bank's strategic direction. The primary activities we see CSRs handling are
sales/new business, service, branch support, and administration.
Performance is a function of how banks manage and structure time. This is where
the significance of work process has the greatest impact. Independent studies
conducted by the Robert E. Nolan Company show that high-performing banks
have a work distribution of 55 percent on sales and account opening, 18 percent
on fee and non-fee services, 8 percent on customer problem resolution, and 19
percent on administration and other. Average performing banks, on the other
hand, see their CSRs spending more time in problem resolution (25 percent) and
less time (30 percent) in actual sales and account opening. A factor influencing
this difference in performance is that average performing bank CSRs spend more
time opening individual accounts and therefore open fewer accounts per month
than the time allows.
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High performing banks put on 152 new accounts per employee versus the
average bank's 139 new accounts, an increase of 9.35 percent. Looking deeper
into the data, high-performing banks open only 25 percent of new deposits to the
total deposit account balances with their efforts as opposed to 32 percent for the
average bank. When we further dissect the information, we see the new non-time
deposit account balances as a percentage of total non-time deposit balances was
14 percent in top-tier banks versus 20 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 existing deposits better than
the average banks. What are the underlying factors that might support this
outcome? 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. In some cases, it has literally transformed the retail banks from "order
takers" to "business development" engines. CSRs have had their offerings
expand to include insurance, investment and select deposit products. It can be
difficult to train CSRs in the relative benefits of each vehicle and often the
weight of the incentive to the product drives them, not the need.
Not every bank has experienced the same success in terms of this change
translating directly to the bottom line. When banks examine the incentives that
are paid to CSRs there are a couple of telling characteristics to look for. Many
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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 CSR could have sold
the account based on its features. Successful banks establish both branch and
individual sales thresholds before incentives are earned.
A second element to consider is what the bank is strategically trying to achievenet new business. In 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 existing 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 existing customers.
Not 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 excellent market data has
greatly assisted the banks who understand where to place their sales and service
emphasis.
Segmentation of the market is significant since it is not so much a measure of the
actual effort as where the effort is extended. Today over 400 CRM models are on
the market, and the tools are more affordable with greater applications.
Deployment is as much a part of the success of the tools as it is with any
technology. Often the marketing teams concentrate on a specific use and not on
developing market intelligence. For example, 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. Applying science and analytics to the data
suggests that the most pertinent information will lead to selling new products to
existing customers.
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This analysis also applies to the possible loss of customers. In 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 existing work processes. Often this
happens with HELOC campaigns and the CSRs cannot meet customer service
expectations. This is an example 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 equation. Many new business processes are burdened at the
point of the CSR, with too many unconnected information inputs. As mentioned
earlier, it is common that 65 percent to 80 percent of new sales are due to
existing customers, but ironically, processes are not structured to take advantage
of that information in an automated way. Often banks profess to have their
process integrated, but rather have a series of largely manual steps.
For instance, they take an application for a retail loan and submit it for credit
approval. It is common to find that the input form or screen for credit differs
from the loan application, thus requiring a separate input. When the loan is
approved, there is a separate input form or screen for document preparation. In
many cases, the CSR needs to prepare a separate document to show that they
have properly completed an assessment of the customer's full investment, loan
and deposit account needs with an entirely separate input form and screen. After
the loan is approved, a separate incentive form or screen may need to be
completed. Lastly, separate boarding documents get the loan booked on the
accounting system. Every step in the process may be thought of as employing
technology, but without integration, it requires multiple inputs of the same
information. A significant portion of CSR effectiveness is in the details of the
process.
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The staffing and scheduling element has as much to do with success in CSR
effectiveness as with teller effectiveness. Banks should utilize the proper
information to determine how many CSRs are deployed, and see that they have
the right tools and products to be successful. Unfortunately, very little science
has been applied to the CSR position in banks, and this is where the sales service
face is presented to the customer and potential customer base.
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CONCLUSION:
Already there are indicators that the above issues have started weighing with the
HRM. It is seen that the recruitment process in the banking industry is changing.
Apparently future recruitment will be clearly driven by the number of persons
needs at different levels.
The routine skills and functions will be to a large extend outsourced and banking
will be more to recruit a large number of person with different qualifications, post
them across geography, train them and nurture them internally.
Banks will also used to the word attrition and learn to manage this aspect. It is also
hopped that the market will offer ready to use candidates who have, in addition to
IT, Retail, Finance and other specializations and good level of banking knowledge.
In such a situation packet should be market driven and adequate. Another thing
that will change is policy of transferring people across the country.
On the contrary, talents will be recruited locally and nurtured. Those who like the
challenges and salary will apply for the jobs in different locations. Continuity and
responsibility towards customer could be more if people are recruited for different
geographical locations.
As more and more new skills are wanted by the banking sector, training could be
outsourced and blended with learning. There is a need for an active dialogue with
the academic institutions such that candidates are job- ready. Finally, it is hoped
that the ever expanding IT inventions could be more effectively used in reaching
training across the geography rather than run huge in house infrastructures.
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INTERVIEW ANALYSIS
For
better
VEERASHAIVA
understanding
of
CO-OPERATIVE
this
project
BANK
LTD.
have
were
visited
I
met
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ANNEXURES
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BIBLOGRAPHY
WEBSITES:
www.wikipedia.com
www.google com.
www.yahoo.com.
www.rediffmail.com.
www.freedictionary.com.
MAZAGINE: - BANK QUEST ON HUMAN RESOURCE MANAGEMENT
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