Im­por­tance of Hu­man Re­source Devel­op­ment in Banks

Economic Challenger - - CONTENTS - - Vani Harpana­halli & S. Van­dana


In the present sce­nario of glob­al­iza­tion, and in­creas­ing in­ter­de­pen­dence among var­i­ous sec­tors, Hu­man Re­source Devel­op­ment is ex­pected to per­form a very cru­cial role. HRD in­trin­si­cally rec­og­nizes that 'peo­ple' are the or­ga­ni­za­tion's sin­gu­larly im­por­tant and valu­able re­sources and that they need to be devel­oped in terms of their knowl­edge, skill and at­ti­tude for achiev­ing their per­sonal as well as or­ga­ni­za­tional goals. HRD must con­cen­trate on mov­ing up the value chain and fo­cus on value cre­ation and value ad­di­tion. This pa­per fo­cuses on the im­por­tance of HRD in ser­vice sec­tor with spe­cial ref­er­ence to bank­ing sec­tor. Key words: Glob­al­iza­tion, Hu­man Re­source Devel­op­ment, Strate­gies.

HU­MAN RE­SOURCE DEVEL­OP­MENT' (HRD) sig­ni­fies an ef­fort aimed at "qual­i­ta­tive im­prove­ment of hu­man be­ings in their spe­cific role as as­sets of an or­ga­ni­za­tion". Be­cause only dy­namic peo­ple can build dy­namic or­ga­ni­za­tions and only com­pe­tent and mo­ti­vated peo­ple en­able an or­ga­ni­za­tion achieve its goals. Glob­al­iza­tion dom­i­nates the com­pet­i­tive hori­zon and en­tails new mar­kets, new prod­ucts, new mind­sets, new com­pe­ten­cies and new ways of think­ing about busi­ness. The rapid move­ment of prod­ucts, peo­ple, in­for­ma­tion and ideas around the world fo­cus on global economies of scale. It re­quires a global mind­set and a lo­cal com­mit­ment: Think­ing glob­ally but act­ing lo­cally. To ac­com­plish this am­bi­tious agenda, or­ga­ni­za­tions will have to fun­da­men­tally re­de­fine them­selves as that of a global re­lay team. Or­ga­ni­za­tions will have to build global ca­pa­bil­i­ties such as the abil­ity to seam­lessly move tal­ent, ideas and in­for­ma­tion around the world to cre­ate prod­ucts and ser­vices at an op­ti­mum pace with qual­ity above par. They will have to build an em­ployee in­fra­struc­ture for hir­ing, main­tain­ing, train­ing and de­vel­op­ing that takes a global per­spec­tive which is made pos­si­ble through the Hu­man Re­source Devel­op­ment (HRD) ac­tiv­i­ties

HRD as a con­cept de­mands a spe­cific and con­ge­nial cli­mate to take root. It en­riches the


work life in an or­ga­ni­za­tion and aims to link pro­duc­tiv­ity with a sense of per­sonal ful­fill­ment. HRD in­volves all man­age­ment de­ci­sions and prac­tices that di­rect, af­fect or in­flu­ence the Hu­man Re­sources in the or­ga­ni­za­tion. In re­cent years, in­creased at­ten­tion comes from the re­al­iza­tion that an or­ga­ni­za­tion's em­ploy­ees en­able an or­ga­ni­za­tion to achieve its goals and the man­age­ment and devel­op­ment of th­ese re­sources is crit­i­cal to an or­ga­ni­za­tion's success (Schuler, 1992). HRD in many con­texts proved it­self as a key el­e­ment in cop­ing with many acute prob­lems cre­ated by eco­nomic, so­cial and tech­no­log­i­cal trends.

The im­por­tance of HRD as a cat­alytic agent of growth has been in­creas­ingly rec­og­nized which makes nec­es­sary or­ga­ni­za­tional ef­fort to help the man­agers in adapt­ing to the emerg­ing changes of en­vi­ron­ment. It is mov­ing up in the lad­der of value chain from mere ad­min­is­tra­tive func­tion to a value con­trib­u­tory fac­tor. HRD is a key to har­ness­ing change through ap­pro­pri­ate skills. It pro­motes learn­ing cul­ture.


The Ser­vice sec­tor is un­der­go­ing a sea change in the post glob­al­iza­tion era. Ser­vice sec­tor refers to the 'in­tan­gi­ble goods'. A ser­vice sec­tor is rather the more prom­i­nent sec­tor where the hu­man cap­i­tal, cre­ativ­ity and in­no­va­tion pro­vide

the ba­sis for success. The main chal­lenges that are ex­pe­ri­enced in this sec­tor are: 1. Tech­no­log­i­cal in­no­va­tions 2. In­tense com­pe­ti­tion 3. In­creased cap­i­tal mo­bil­ity 4. Ris­ing ex­pec­ta­tions of con­sumers and work­ers.

Th­ese forces are prompt­ing or­ga­ni­za­tions to re­align their sys­tems and pro­cesses. Thus, the HRD man­agers have a com­plex role to per­form. They have to in­tensely keep on try­ing to gen­er­ate the com­pet­i­tive ad­van­tage which is promis­ing fac­tor for the sus­te­nance of the or­ga­ni­za­tion. There are three im­por­tant di­men­sions for HRD pro­fes­sion­als. 1. Evolv­ing the need based HRD strate­gies 2. En­sur­ing the em­ployee par­tic­i­pa­tion 3. De­vel­op­ing an en­abling cul­ture for a planned change.

Th­ese ob­jec­tives call for holis­tic and in­te­grated view of HRD with spe­cial ref­er­ence to the or­ga­ni­za­tional anal­y­sis, HRD strat­egy for­mu­la­tion and care­ful im­ple­men­ta­tion.

Tech­no­log­i­cal ad­vance­ments and the knowl­edge econ­omy has opened a whole set of op­por­tu­ni­ties. Change is vivid in ser­vice sec­tor, and bank­ing as a part of ser­vice sec­tor is not ex­cep­tion. In the chang­ing en­vi­ron­ment the or­ga­ni­za­tions and the in­di­vid­u­als must keep on learn­ing. HRD is the field of study and prac­tice re­spon­si­ble for the fos­ter­ing of a long term work re­lated learn­ing ca­pac­ity at the in­di­vid­ual, group and or­ga­ni­za­tional lev­els.

To main­tain their sta­tus in the com­pet­i­tive en­vi­ron­ment banks have to con­cen­trate in de­vel­op­ing their hu­man re­sources.

In any or­ga­ni­za­tion the qual­ity and the amount of pro­duc­tiv­ity mainly de­pends on the skill and in­ter­est of the em­ploy­ees. Bank­ing sec­tor also is de­pen­dent on the qual­ity of HRD prac­tices for the mo­ti­va­tion of the em­ploy­ees.

HRD seeks to bring about over­all devel­op­ment of em­ploy­ees by en­abling them to im­prove their knowl­edge, skill and be­hav­ior. It helps them to de­velop bet­ter aware­ness about their roles in the work sit­u­a­tion and con­trib­utes to the process of in­te­gra­tion of em­ploy­ees with the or­ga­ni­za­tion. An ef­fec­tive im­ple­men­ta­tion of HRD ac­tiv­i­ties would re­sult in ex­cel­lent or­ga­ni­za­tional cli­mate for the peo­ple to be com­pe­tent and pro­duc­tive.

HRD ac­quires spe­cial mean­ing in bank­ing in­dus­try due to a va­ri­ety of fac­tors. Bank­ing is a la­bor-in­ten­sive in­dus­try. So, the qual­ity of bank­ing ser­vices and the ob­jec­tives in achiev­ing the so­cio-eco­nomic goals are highly de­pen­dent on the em­ploy­ees who de­liver the ser­vices. Also client devel­op­ment in­volves to­tal involvement of the em­ploy­ees in the process of ren­der­ing ser­vices. Thus, the task of HRD will al­ways be cen­tral and ne­glect of HRD func­tion is likely to de­stroy the fab­ric of bank­ing it­self.


Hu­man Re­source Devel­op­ment in a grow­ing econ­omy like In­dia is the need of the time and un­doubt­edly, bank­ing sec­tor is the most ef­fec­tive in­stru­ment for In­dia's eco­nomic devel­op­ment, for which de­vel­op­ing Hu­man Re­sources for this sec­tor has be­come es­sen­tial to achieve the na­tional ob­jec­tives.

Banks con­sti­tute the very life blood of mod­ern econ­omy. A well devel­oped bank­ing sys­tem is a pre­req­ui­site for the eco­nomic devel­op­ment of, par­tic­u­larly, a de­vel­op­ing econ­omy like In­dia. Banks not only pro­vide the nec­es­sary funds for the growth of the var­i­ous sec­tors but also in­flu­ence the di­rec­tion in which the funds are uti­lized. In a coun­try like In­dia banks are ex­pected to per­form a devel­op­men­tal role and the role of a na­tion builder.

More­over, the banks are ex­pected to play a rather con­struc­tive role in the post na­tion­al­iza­tion era. In the words of late prime Min­is­ter Indira Gandhi "while the na­tion is com­mit­ted to es­tab­lish a pat­tern of so­ci­ety, the Government felt that the pub­lic own­er­ship and con­trol of the com­mand­ing heights of na­tional econ­omy and of its strate­gic sec­tors were es­sen­tial as­pect of the new so­cial or­der." The na­tion­al­iza­tion of the banks was felt to be a sig­nif­i­cant step in the achieve­ment of the so­cial ob­jec­tives of the na­tion. Since then banks were at­tached with some so­cial re­spon­si­bil­i­ties viz. ad­vances to pri­or­ity sec­tor, so­cial bank­ing etc. With the above ex­plained ex­ist­ing sce­nario man­ag­ing a com­mer­cial bank in In­dia is unique and chal­leng­ing as com­pared to any other eco­nomic ac­tiv­ity. Bank­ing ac­tiv­i­ties are highly

reg­u­lated both by the so­cial value sys­tems and mon­e­tary con­sid­er­a­tions.

The need of the HRD in bank­ing in­sti­tu­tions has con­tin­u­ously grown be­cause of the ef­fec­tive role they are called upon to play in the task of so­cio eco­nomic devel­op­ment and re­ha­bil­i­ta­tion of es­pe­cially those peo­ple who were hith­erto ne­glected and de­prived. The high ex­pec­ta­tions of the so­ci­ety on the bank­ing sys­tem can­not be met with­out the devel­op­ment of in­tegrity, ef­fi­ciency and be­hav­ioral pat­tern of those who are work­ing in banks.

There is an­other di­men­sion for the same story. In the wake of dereg­u­la­tion, lib­er­al­iza­tion, and glob­al­iza­tion of In­dian Econ­omy the bank­ing sys­tem is get­ting grad­u­ally in­ter­na­tion­al­ized. In the en­vi­ron­ment of glob­al­iza­tion the In­dian Com­mer­cial Banks have to equip them­selves to meet the chal­lenges of com­pe­ti­tion within the coun­try and out­side. Be­sides, the clien­tele of the banks is not only in­creas­ing but also get­ting di­ver­si­fied.

Here lies the whole im­por­tance of HRD. The im­age of the bank de­pends on the per­for­mance level of the em­ploy­ees. It is only through the im­ple­men­ta­tion of well de­signed HRD pro­grams that the per­for­mance level of em­ploy­ees is en­hanced. The HRD must aim at de­vel­op­ing the ca­pa­bil­i­ties to meet the needs of both in­ter­nal and ex­ter­nal en­vi­ron­ment, at­tain­ing self con­fi­dence and mo­ti­va­tion for pub­lic ser­vice. It must also aim at giv­ing more thrust on the hu­man re­sources to en­cour­age cre­ativ­ity for the bet­ter cus­tomer ser­vice.

HRD ef­forts in banks there­fore fo­cus on build­ing a strong char­ac­ter of hon­esty, in­tegrity and truth­ful­ness. HRD ef­forts crys­tal­lize the val­ues that are goal sup­port­ive and con­tri­bu­tion ori­ented. It em­pha­sizes the func­tional style, ethos, cul­ture and work ethics which are built around peo­ple, man­i­fest­ing a con­cern and is sen­si­tive to the needs of the or­ga­ni­za­tion. An ef­fi­cient and ef­fec­tive com­mer­cial bank­ing ac­tiv­ity is the re­sult of ef­fec­tively mo­ti­vated em­ploy­ees. Only when the em­ploy­ees are trained, mo­ti­vated and com­mit­ted the ob­jec­tives of the banks are achieved fully. The HRD pol­icy in the banks has to act as an ef­fec­tive in­stru­ment to en­cour­age the em­ploy­ees to show cre­ativ­ity to reach ex­cel­lence and fi­nally to ren­der bet­ter cus­tomer ser­vice. In the light of this aware­ness banks are re­vamp­ing their pro­ce­dures and meth­ods of work for eco­nomic and tech­ni­cal rea­sons. The need for HRD is also re­al­ized in view of changed job de­sign to suit au­to­ma­tion and chang­ing char­ac­ter­is­tics of new groups of re­cruits. The staff needs to learn new skills and knowl­edge to cope with the chang­ing tech­nol­ogy. The ob­jec­tives of HRD in banks should aim at 1. Cre­at­ing a cli­mate of open­ness and trust. 2. Build­ing a col­lab­o­ra­tion cul­ture whereby ev­ery­body is an im­por­tant mem­ber of an or­ga­ni­za­tion. 3. Pre­par­ing in­di­vid­u­als for tech­ni­cal

com­pe­tence. 4. Psy­cho­log­i­cal pre­pared­ness for will­ing­ness

to par­tic­i­pate in changed im­ple­men­ta­tion. 5. Pro­mot­ing hu­man ca­pa­bil­i­ties and

com­pe­ten­cies in the or­ga­ni­za­tion. 6. Fa­cil­i­tat­ing to build a strong char­ac­ter of

hon­esty and in­tegrity of per­for­mance. 7. Im­prov­ing the qual­ity of work life. Based on var­i­ous stud­ies con­ducted on the HRD in banks the fol­low­ing con­clu­sions can be drawn The HRD prac­ticed in the banks has a strong in­flu­ence on their em­ploy­ees’ per­for­mance. Pri­vate Banks have placed less em­pha­sis on HRD prac­tices in their or­ga­ni­za­tions, which may be due to lack of ad­e­quate ori­en­ta­tion and re­source al­lo­ca­tion to­wards de­vel­op­ing their hu­man fac­tor. Top Per­form­ing Banks have a higher ex­tent of HRD prac­tice in their or­ga­ni­za­tions, which in­flu­ences the ef­fec­tive­ness of their or­ga­ni­za­tions.

Thus it could be con­cluded that high ex­tent of HRD prac­tices and bet­ter per­for­mance go hand in hand. HRD and per­for­mance level of the em­ploy­ees are twin sis­ters. They grow si­mul­ta­ne­ously. This should be re­al­ized by the banks with low per­for­mance. New gen­er­a­tion banks are im­part­ing the best kind of train­ing to the em­ploy­ees. It should also be adopted by the tra­di­tional na­tion­al­ized as well as pri­vate banks. The Low Per­form­ing banks have to lay em­pha­sis on de­sign­ing key per­for­mance ar­eas which can in­crease role clar­ity and en­hance their per­for­mance.

Peo­ple ori­ented per­spec­tive should be devel­oped in or­der to build up good com­pet­i­tive ad­van­tage. The top man­age­ment must in­still team spirit and col­lab­o­ra­tive work­ing in their or­ga­ni­za­tions. Proper re­cruit­ment strat­egy must be de­signed in or­der to re­cruit more num­ber of peo­ple with tech­ni­cal skills. The tech­ni­cal ex­per­tise is the need of the hour. At the same time the mind­set of the em­ploy­ees also should change ac­cord­ingly The Top Pri­vate Banks vouch­safe this. Proac­tive mea­sures must be adopted by pro­vid­ing a con­tin­u­ous en­vi­ron­ment of open­ness and ex­plo­ration into new mar­kets rather than adopt­ing a prob­lem solv­ing ap­proach.


“While the risk man­age­ment sys­tems can be put in place, tech­nol­ogy can be har­nessed to de­liver more value to the cus­tomer, success in a dereg­u­lated en­vi­ron­ment can come about only if the hu­man re­sources in the banks are fully pre­pared to meet the chal­lenges. Thus the abil­ity of the banks to ex­e­cute the cho­sen strat­egy and achieve the de­sired goals de­pends on whether they can or­ga­nize, de­velop and man­age hu­man re­sources.”

The above state­ment is given by one of the lead­ing pub­lic sec­tor banks in its pol­icy drafts. It clearly brings out the im­por­tance the Pub­lic Sec­tor Banks at­tach to the HRD.

The Pub­lic Sec­tor Banks seem to re­al­ize the ad­verse age pro­file of the em­ploy­ees. The re­cruit­ment, thus as­sumes greater im­por­tance. There is a thor­ough need to be more ag­gres­sive and proac­tive to cap­ture a greater share in the mar­ket. Banks now take up the strat­egy of re­cruit­ing more of spe­cial­ist of­fi­cers in the ar­eas of credit, FOREX, mar­ket­ing etc. Th­ese are be­lieved to have an edge over gen­eral of­fi­cers.

Banks also re­al­ize the threat posed by high rate of at­tri­tion of ex­pe­ri­enced, skilled and qual­ity staff. It is also pointed out that the fresh re­cruits coming from di­verse ge­o­graphic ar­eas, of dif­fer­ent lan­guages are find­ing it dif­fi­cult to get in­ducted in the new or­ga­ni­za­tional cli­mate.

As the tal­ent re­ten­tion is highly im­por­tant, it is sup­posed to be achieved by ef­fec­tive and proper tal­ent man­age­ment by Place­ment of right per­son at right place In­te­grat­ing th­ese new en­trants into our or­ga­ni­za­tional cli­mate and cul­ture Through ef­fec­tive tal­ent recog­ni­tion mech­a­nism Strength­en­ing the ex­ist­ing cell which closely mon­i­tors the needs of the new re­cruitees, through reg­u­lar feed backs and acts as a men­tor, coun­sel­lor and griev­ance re­dres­sal.

Banks also find the im­por­tance of com­pe­tency map­ping done pro­fes­sion­ally, and most of the times by ex­ter­nal agents, so that in­di­vid­u­als with the right com­pe­ten­cies are iden­ti­fied to place them in jobs most ap­pro­pri­ate for their ca­pa­bil­i­ties.

Banks rec­og­nize the im­por­tance of place­ment, as a mo­ti­va­tional tool to re­ward per­former. Place­ment of right man with the right skill at the right place is given top most pri­or­ity.


To im­prove ef­fec­tive­ness of the Bank train­ing is the main tool. By train­ing em­ploy­ees are en­abled to re­al­ize their growth po­ten­tial and make sig­nif­i­cant con­tri­bu­tion to­wards achieve­ment of Bank's ob­jec­tives. The strate­gies should be de­signed in such a way that the in­di­vid­ual's goals are in­te­grated with the or­ga­ni­za­tional growth. Iden­ti­fi­ca­tion of train­ing needs for multi task­ing and spe­cial­ist ar­eas, in­ten­sive train­ing for tal­ent en­hance­ment are needed E- learn­ing has to be im­ple­mented for con­tin­u­ous learn­ing through web. Con­fer­ence method can also be adopted, where the em­ploy­ees ac­quire knowl­edge lo­cated at var­i­ous places. Fo­cus must be thrown on per­for­mance ap­praisal sys­tem also. It must be trans­par­ent. It would be help­ful in sep­a­rat­ing per­form­ers and non per­form­ers.

There­fore, HRD has a cru­cial role to play, in a ser­vice in­dus­try like Banks. Banks must adopt the suit­able HRD strate­gies in or­der to sus­tain, and grow in the present day's com­pet­i­tive en­vi­ron­ment.

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