INTRODUCTION

Human Resource management is concerned with the people

dimensions in the management. Since every organization is
made up of people, acquiring their services developing their
skills motivating them to higher levels of performance and
ensuring that they continue to maintain their commitment to the
organization are essential to achieving organizational
objectives. This is true, regardless of the type of organization
government, business, education, health, recreation or social
actions.
Thus, HRM refers to a set of programmes, functions and
activities designed and carried out in order to maximize both
employees as well as organisational effectiveness.

IMPORTANCE OF HUMAN RESOURCE

Attracting the most qualified employees and matching them to
the jobs for which they are best suited is important for the
success of any organization. However, many enterprises are
too large to permit close contact between top management
and employees.
Human resources, training, and labor relations managers and
specialists provide this link. In the past, these workers have
been associated with performing the administrative function
of an organization, such as handling employee benefits
questions or recruiting, interviewing, and hiring new
personnel in accordance with policies and requirements that
have been established in conjunction with top management.
Today's human resources workers juggle these tasks and,
increasingly, consult top executives regarding strategic
planning. They have moved from behind-the-scenes staff
work to leading the company in suggesting and changing
policies. Senior management is recognizing the importance
of the human resources department to their bottom line.

OBJECTIVES OF HRM:
Societal Objectives: to be ethically and socially responsible to
the needs and challenges of the society while minimizing
the negative impact of such demands upon the organisation.
Organisational Objectives: to recognise the role of HRM in
bringing about Organisational effectiveness.
Functional Objectives: to maintain the departments
contribution at a level appropriate to the organisations
needs.
Personal Objectives: to assist employees in achieving their
personal goals, at least in so far as these goals enhance the
individuals contribution to the organisation.

ORIGINS AND INTERPRETATIONS

Origins. - HRM-type themes, including 'human capital theory
and 'human asset accounting', can be found in the literature
from the 1970s. However, the modern view of human resource
management first gained prominence in 1981 with its
introduction on the prestigious MBA course at Harvard
Business School. Simultaneously, other interpretations were
being developed in some other places around the world.

Different interpretations of HRM. - The Harvard

interpretation sees employees as resources. However, they are
viewed as being fundamentally different from other resources they cannot be managed in the same way. The stress is on
people as human resources.
Human resource flows - recruitment, selection, placement,
promotion, appraisal and assessment, promotion, termination,
etc.
Reward systems - pay systems, motivation, etc.
Employee influence - delegated levels of authority,
responsibility, power

Work systems - definition/design of work and alignment of

people.
Which in turn lead to the 'four C's' or HR policies that have to
be achieved:
Commitment
Congruence
Competence
Cost effectiveness

Philosophy :
"The philosophy does not limit itself to direct employees of an
organization. Therefore humans or people - as opposed to just
employees - need to be managed in a way that is consistent with
broad organizational requirements such as quality or efficiency.
Personnel policies and organization structures have to be
managed in a way that is congruent with organizational strategy
and organizational effectiveness depends on there being a tight
'fit' between human resource and business strategies. HRM
strategies are all about making business strategies work and so
emphasis is placed on how to best match and develop
'appropriate' HRM systems."

The Theorists highlighted the following as being the most

important HR issues to achieve such a match:
Selection of the most suitable people to meet business needs
Performance in the pursuit of business objectives
Appraisal, monitoring performance and providing feedback to
the organization and its employees
Rewards for appropriate performance
Development of the skills and knowledge required to meet
business objectives
Planning choices: Informal ... Formal; Short-term ... Longterm; Explicit ... Implicit job analysis; Job simplification ... Job
enrichment; Low employee involvement ... High employee
involvement
Other choices were given for staffing, appraising,
compensating, and training/development.

PEOPLE MANAGEMENT
People management is a central strategic issue rather than a
'necessary inconvenience.
Arguably, HRM has become the dominant approach to people
management in English-speaking countries. However, it is
important to stress that human resource management has not
'come out of nowhere'. HRM has absorbed ideas and techniques
from a number of areas. In effect, it is a synthesis of themes and
concepts drawn from over a century of management theory and
social science research.
There is a long history of attempts to achieve an understanding
of human behavior in the workplace. Throughout the twentieth
century, practitioners and academics have searched for theories
and tools to explain and influence human behavior at work.
Managers in different industries encounter similar experiences:
businesses expand or fail; they innovate or stagnate; they may
be exciting or unhappy organizations in which to work; finance
has to be obtained and workers have to be recruited; new
equipment is purchased, eliminating old procedures and
introducing new methods; staff must be re-organized, retrained
or dismissed. Over and over again, managers must deal with
events, which are clearly similar but also different enough to
require fresh thinking.

Many of the concepts have been integrated into broader

approaches which have contributed to management thinking in
various periods and ultimately the development of HRM .

The most significant include:

* Scientific management. A hard-nosed and authoritarian
approach to management developed by F.W. Taylor at the
beginning of the 20th century. Taylor believed in a combination
of detailed task specifications and selection of the 'best man' for
the job. Taylor's ideas led on to:
- Fordism a philosophy of production based on the continuous
assembly line
techniques devised by Henry Ford. This methodology
dominated worldwide manufacturing until the 1980s.
- Time and motion - stopwatch methods of measuring work,
used to increase
efficiency and minimize wasted time and effort.
- Continuous improvement - fundamental to Japanese
production methods:
using employee knowledge and ingenuity to continually refine
product manufacture and development.
These practices require management control over the precise
detail of work in order to maximise efficiency and gain
competitive advantage.

* Human factors. In Australia, New Zealand and particularly - the UK, government-sponsored research by work
psychologists. They established that fatigue arose from
psychological as well as physical causes. They demonstrated
also that working longer hours did not necessarily increase
productivity. These underlie key HRM techniques such as
competence assessment and selection methods.

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CONCEPTS:
The concepts have exercised strong influences on managers but,
like fashions in hairstyle and clothing, management ideas come
and go. Today's best-selling management concept will not
survive long before being overtaken by the next 'big idea'.
Significantly, however, a consistent theme has prevailed for 20
years: the most successful organizations make the most
effective use of their people - their human resources. In fact, the
emergence of HRM is part of a major shift in the nature and
meaning of management towards the end of the 20th century.
This has happened for a number of reasons. Perhaps most
significantly, changes in the structure and intensity of
international competition have forced companies to make
radical changes in their working practices
The shift of economic power to the Asia-Pacific region
emphasized the weakness in traditional western - specifically,
American - management methods. To meet competition from
east Asia, industries and organizations in older developed
countries have been forced to restructure. The Japanese
provided both a threat and a role model which eastern and
western companies tried to copy. Frequently, reorganized
businesses have adopted Japanese techniques in an attempt to
regain competitiveness. The term 'Japanization' came into

11

vogue in the mid-1980s to describe attempts in other countries

to make practical use of 'Japanese' ideas and practices,
reinforced by the impact of Japanese subsidiaries overseas.
Initially, the main interest lay in forms of technical innovation
and manufacturing methods such as 'continuous improvement'
and 'just-in-time'. More recently their ways of managing people
have attracted attention.
Japanese practice indicates that human resources are an
organization's key asset. A key feature of Japanese
organizations is the emphasis on worker commitment,
flexibility and development. Books highlighted the competitive
advantage which the Japanese gained through effective people
management. The message came through that 'at bottom, it is
the human resource among all the factors of production which
really makes the difference.

KEY CONCEPT
Stakeholders
Employees have rights and interests other than pay. They are
stakeholders in common with members of other recognisably
separate groups or institutions with a special interest in an
organization. These include shareholders, managers, customers,
suppliers, lenders and government. Each group has its own

12

priorities and demands and fits into the power structure

controlling the organization. In reality, top managers normally
have effective control and pursue their own interests - often at
the expense of their staff.

13

MODELS OF HR PRACTICE
The resource-based view has influenced a number of models
that try and demonstrate how a strategic approach to HR can be
translated into a set of coherent HR policies. Here are two
broad approaches. First, universal approach models imply that
there is one best way for achieving high performance
regardless of the context or specific circumstances of the firm.
Second, contingency models link human resource management
policies adopted by the organization to the particular aspect of
the business environment. The universal model vary in their
emphasis but they all put a premium on ensuring that HR
policies are meshed together coherently and reflect the
requirements of the external business environment.
By contrast the contingency model link HR policies to the
particular circumstances of the organisation. Some models
emphasis that it is the stage of the organizations life cycle
(start-up, growth, maturity) that should determine HR policy
whilst others focus on the characteristic of the firm whether a
single product firm or a highly diversified business. Finally,
whether a firm is competing on the basis of cost, quality or
innovation has also been associated with particular HR
strategies.

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Table: Seven dimensions of HR that produce profits through

people
1. Employment security
2. Selective hiring of new personnel
3. Self-managed teams and decentralization of decision
making as the principle of organisational design
4. Comparatively high compensation contingent on
organisational performance
5. Extensive training
6. Reduced status distinction and barriers, including dress,
language, office arrangements and wage differences
across level
7. Extensive sharing of financial and performance
information throughout the organisation

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HRM AND THE BUSINESS ENVIRONMENT

Introduction.
The relationship between HRM and the business environment is
that it encompasses the influence of the state, the economy and
national cultures on the management of people.
HRM and global competitiveness. HRM is a system within
other systems. The most complex of these is the international
business environment. The forces, which act on people
management, are not purely internal to an organization. Factors
outside a company's control will affect its requirements for
human resources and the way they are managed.
Growth and employment. Economic growth is the most
significant overriding variable for people management since it
determines overall demand for products and services, and hence
employment.
Economic turbulence. The law of the market jungle rules survival of the leanest, fittest and fastest. 'Market
Darwinism' forces businesses to change direction at short
notice, seeking any possible competitive advantage.
Businesses have to keep a worldwide watch for the next
revolutionary improvement in productivity or service.

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Section II
DEFINITION AND MEANING OF SERVICE SECTOR
A service is an activity or a benefit that one party can offer to
another , that is essentially intangible and does not result in the
ownership of anything. Philip Kotler.
Service sector is different form all the other sectors in many
aspects, for one, the key factor is customer focus and not a
function. Product is first offered and then produced, what this
does is that the quality of the product offered could change
depending upon the way in which the service is offered. From
all of this what we can infer is that, customers form an integral
part of the organisations strategy and in order to cater to them
the company would require a committed work force.
Employees are the internal customers who in their job depend
upon others in the organisation for providing goods and
services to external customers. Hence directly or indirectly
every employee in the organisation in one way or the other
serves the external customer.
This is where HR comes in. It makes sure that the work force
are properly motivated to work towards the promises that
have been promised by the company to the External
environment.

17

And that is why HR plays such a critical role in a service sector.

18

RELEVANCE OF HR IN SERVICE SECTOR

Company

Enabling the promise

promise

Setting the

Employee
Customer
Delivering the promise
1. Company sets some promise , setting the promise ,
anything that the company commits before the actual
delivery , is the promise.
2. Company then has to enable its employees , so as to
meet the promise that has been set towards the
customers.
3. Finally the employees deliver the promise to the
customers.

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HRM comes in at the enabling the promise stage, as the

company has to motivate the employees in such a way as to
keep its promise towards the customers.

Section III

ROLE OF BANKS

The continuously developing roles and activities of central

banks and, where distinct, financial regulatory agencies
intensify their need for expert and committed staff. In both
strategic and operational human resource management terms,
this requires attention to the principal aspects of ensuring
appropriate personnel development and training, staff planning
and the ability to retain and motivate individuals and groups.
More broadly, governing boards, governments and the general
public need assurance that official organisations are using their
resources optimally in order to achieve their mandate: that is,
they require accountability.

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Ensuring that the central bank or regulatory agency can recruit

and retain appropriately qualified and experienced staff in the
right place, at the right time, is at the heart of this challenge.
This is further complicated by external developments,
particularly competition for important personnel from the
private sector.
Moreover, because a significant number of senior staff is
eligible for retirement, management succession planning and
organisational structure is another top priority. Accordingly,
there are seminar and workshop sessions on the critical priority
areas of developing performance measures and management,
and employee and organisational development. In the euro area,
for example, central banks are confronted with the challenge of
downsizing over the longer term while simultaneously adjusting
to their new roles. Increasing but shifting workloads have also
necessitated the introduction of new positions while reducing
the number of vacant positions in other divisions.
Therefore, an effective human resource/personnel function is at
the heart of an efficient modern central bank or regulatory
agency. The function has to be integrated at the highest level
with the overall "mission" and "objectives". At a time of rapid
technological and financial market change, is it still realistic to
aim to develop a particular "culture" of public service? How

21

would it differ from the performance culture in a well-run

private sector corporation? These questions are each addressed
in detail.

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TYPES OF BANKS

The Indian banking can be broadly categorized into

nationalized (government owned), private banks and
specialized banking institutions.The Reserve Bank of India
acts a centralized body monitoring any discrepancies and
shortcoming in the system. Since the nationalization of banks
in 1969, the public sector banks or the nationalized banks have
acquired a place of prominence and has since then seen
tremendous progress. The need to become highly customer
focused has forced the slow-moving public sector banks to
adopt a fast track approach. The unleashing of products and
services through the net has galvanized players at all levels of
the banking and financial institutions market grid to look anew
at their existing portfolio offering. Conservative banking
practices allowed Indian banks to be insulated partially from
the Asian currency crisis. Co-operative banks are nimble
footed in approach and armed with efficient branch networks
focus primarily on the high revenue niche retail segments.

The Indian banking has come from a long way from being a
sleepy business institution to a highly proactive and dynamic
entity. This transformation has been largely brought about by
the large dose of liberalization and economic reforms that

23

allowed banks to explore new business opportunities rather

than generating revenues from conventional streams (i.e.
borrowing and lending). The banking in India is highly
fragmented with 30 banking units contributing to almost 50%
of deposits and 60% of advances. Indian nationalized banks
(banks owned by the government) continue to be the major
lenders in the economy due to their sheer size and penetrative
networks which assures them high deposit mobilization. The
Indian banking can be broadly categorized into nationalized,
private banks and specialized banking institutions.

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The Reserve Bank Of India act as a centralized body

monitoring any discrepancies and shortcoming in the system.
It is the foremost monitoring body in the Indian financial
sector.

The Nationalized Banks are the banks which are owned by

the government ,continue to dominate the Indian banking
arena. Industry estimates indicate that out of 274 commercial
banks operating in India, 223 banks are in the public sector
and 51 are in the private sector.

The Private Sector bank grid also includes 24 foreign banks

that have started their operations here. They are the private
players in the market, who still adhere to the rules and policies
laid down by the government.

Under the ambit of the Nationalized Banks come the

specialized banking institutions. These Co-Operatives,
Rural Banks focus on areas of agriculture, rural development
etc., unlike Commercial Banks these Co-Operative Banks
do not lend on the basis of a prime lending rate. They also
have various tax sops because of their holding pattern and
lending structure and hence have lower overheads. This
enables them to give a marginally higher percentage on

25

savings deposits. Many of these cooperative banks diversified

into specialized areas (catering to the vast retail audience) like
car finance, housing loans, truck finance etc.

TYPES OF BANKS
1998-99
State Bank of India and
Associates
Nationalized Banks
Domestic Private Sector
Banks
New Domestic Private
Sector Banks
Foreign Banks

08
19
25

09
29

Complementing the roles of the Nationalized and Private

Banks are the specialized financial institutions or Non
Banking Financial Institutions (NBFCs). With their focused

26

portfolio of products and services, these Non Banking

Financial Institutions act as an important catalyst in
contributing to the overall growth of the financial services
sector. NBFCs offer loans for working capital requirements;
facilitate mergers and acquisitions, IPO finance, etc. apart from
financial consultancy services. Trends are now changing as
banks (both Public and Private) have now started focusing on
NBFC domains like long and medium-term finance, working
cap requirements. IPO financing to etc. to meet the multifarious
needs of the business community.
In this project I have opted for the Public Sector Bank i.e. Bank
of India.

DIFFERENCE BETWEEN PRIVATE SECTOR BANKS

AND PUBLIC SECTOR BANKS ,WHEN IT COMES TO
HUMAN RESOURCE.
Public Sector banks are basically not known to have a very
indepth policy when it comes to Human resource, but now that
scenario is changing
In the Banking sector, the effort put in by an employee is not
directly observable by supervisors, so questions about the

27

incentives that operate on the employee become extremely

important. Public sector banks have profound rigidities with
human resource policies. They find it hard to hire and fire, and
have poor incentives for good work. They pay below-market
wages, which fundamentally contaminates their HR efforts.
Privatisation would make it possible for them to use private
sector HR policies, which are absolutely essential for a banking
system that functions soundly.
This is what some people think while others are of the opinion
that Public sector banks are doing very well and are helping
fulfill the various government programmes that aid the poor.
Private Banks are not willing to do this. Private Banks is not
willing to go to rural areas, which is a cause for concern.

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Section IV
OBJECTIVES OF MY STUDY
My Objective, through this project, is to study and understand
the Human Resource Policies in the Bank of India and provide
recommendations on the basis of information that I was
provided with.

RESEARCH METHODOLOGY

For the purpose of my study I have collected the relevant

data keeping in mind the aim of my project. I have collected the
data from different sources namely primary and secondary
sources.
Primary Data
The primary data related to the study was collected from the
Head Office and Training Center at Belapur.
Secondary Data
Besides primary data, I have also collected the secondary data.
The secondary data was collected from different sources, which
are given below:

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Websites and Annual Report 2002-2003

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Section V
BANK OF INDIA
OVERVIEW
Bank of India was founded on 7th September, 1906 by a group
of eminent businessmen from Mumbai. The Bank was under
private ownership and control till July 1969 when it was
nationalised along with 13 other banks.
Beginning with one office in Mumbai, with a paid-up capital of
Rs.50 lakh and 50 employees, the Bank has made a rapid
growth over the years and blossomed into a mighty institution
with a strong national presence and sizable international
operations. In business volume, the Bank occupies a premier
position among the nationalised banks.
The Bank has 2528 branches in India spread over all states/
union territories including 93 specialised branches. These
branches are controlled through 47 Zonal Offices . There are 19
branches/ offices (including one representative office at Jakarta,
Indonesia) abroad located in 10 countries.
The Bank came out with its maiden public issue in 1997. Total
number of shareholders as on 31/3/2000 is 4,03,225

31

While firmly adhering to a policy of prudence and caution, the

Bank has been in the forefront of introducing various
innovative services and systems. Business has been conducted
with the successful blend of traditional values and ethics and
the most modern infrastructure. The Bank has been the first
among the nationalised banks to establish a fully computerised
branch and ATM facility at the Mahalaxmi Branch at Mumbai
way back in 1989. The Bank is also a Founder Member of
SWIFT in India. It pioneered the introduction of the Health
Code System in 1982, for evaluating/ rating its credit portfolio.
The Bank's association with the capital market goes back to
1921 when it entered into an agreement with the Bombay Stock
Exchange (BSE) to manage the BSE Clearing House. It is an
association that has blossomed into a joint venture with BSE,
called the BOI Shareholding Ltd. to extend depository services
to the stock broking community.
Bank of India was the first Indian Bank to open a branch
outside the country, at London, in 1946, and also the first to
open a branch in Europe, Paris in 1974. The Bank has sizable
presence abroad, with a network of 21 branches (including
three representative office ) at key banking and financial centers
viz. London, New York, Paris, Tokyo, Hong-Kong and
Singapore. The international business accounts for around
20.10% of Bank's total business.

32

The Bank has a strong position in financing foreign trade. Over

270 branches provide export credit. The expertise in this area
has enabled the Bank to achieve a leading position in providing
export credit in certain areas like diamond export.
The Bank has identified specialized target groups to develop
core advantage for future growth. The Bank, as on March 2003,
had 93 specialized branches comprising
Corporate Banking Branches :to undertake very large credit
business,
Overseas Branches : specializing in Foreign Exchange
Business,
NRI Branches : which specially cater to the requirements of
Non-Resident Indians?
Capital Market Branches : which undertake all activities
relating to capital market such as collection of applications,
processing of refund orders, Merchant Banking etc.
Commercial & Personal Banking Branches cater to the
requirements of high net worth customers.
Apart from this, the Bank also has specialized Branches for
Asset Recovery, Small Scale Industries, Hi-tech Agriculture
Finance, Lease Finance and Treasury.

33

To effectively meet the ever-growing challenges and

competition, the Bank has made a good head-way in bringing
about technological upgradation. MIS and critical functions of
controlling offices have been computerized. At present, the
operations at about 1226 branches are totally computerized.
Another 1057 branches operate in partially computerized mode.
New facilities such as, Telebanking, ATM & Signature
Retrieval Systems have been introduced in a progressing
manner to add value to services. Telebanking facilities with Fax
on Demand facility, Remote Access Terminals for Corporate
Customers are now available at many branches. The Bank has
installed ATMs in Mumbai and other centers in the country. The
Bank is a member of the RBI's VSAT Network and has installed
39 VSATs linking strategic branches/offices. The Bank is
making a paradigm shift from branch automation to bank
automation and is in the process of implementing a MultiBranch Banking Project that facilitates City-wise Connectivity
of Computerized Branches. As on September 2003 the
connectivity has been done in 200 cities/ towns. The Bank is in
the process of installing BOINET, a Wide Area Network for
providing a inter- and intra-city connectivity, as a part of
enhancing its decision support system.
The Bank's corporate personality and philosophy are fully
reflected in the emblem, which is a five-pronged Star -- a
harmonious blend of traditional and the functional. The

34

elongated prong pointing upwards conveys the Bank's drive to

achieve ascending goals. The Star is a beacon and guide to
those in need of direction.

35

MISSION STATEMENT
OUR MISSION
"to provide superior, proactive banking services to niche
markets globally, while providing cost-effective, responsive
services to others in our role as a development bank, and in so
doing, meet the requirements of our stakeholders".
OUR VISION
"to become the bank of choice for corporates, medium
businesses and upmarket retail customers and to provide cost
effective developmental banking for small business, mass
market and rural markets"

36

Bank of India
Organisational Hierarchy
General Manager
HR

DGM
(I.L. Division)
AGM

CM

(HRD)
Terminal Benefits
Dept
CM ( I.L. Division)
Officers,
Officers,
Officers,

CM
(Recruitment,
Promotion, Transfer,
And Placement)

Officers
AGM (Public relations)
AGM (Industrial Relations)
Chief Officer,
Staff

Officers

37

Administration
Officers

38

FUNTIONS OF HR MANAGER in Bank of India

Recruitment - advertising for new employees and liaising

with employment agencies.

Selection - determining the best candidates from those

who apply, arranging interviews, tests and references.

Promotion - running similar selection procedures to

determine progression within the organization.

Pay - a minor or major role in pay negotiation,

determination and administration.

Performance assessment - co-ordinating staff appraisal

and counseling systems to evaluate individual employee
performance.

Grading structures - as a basis for pay or

development, comparing the relative difficulty and
importance of functions.

Training and development - co-ordinating or delivering

programmes to fit people for the roles required by the
organisation now and in the future.

Welfare - providing or liaising with specialists in a staff

care or counseling role for people with personal or
domestic problems affecting their work.

39

Communication - providing an internal information

service, perhaps in the form of staff newspapers or
magazines, handouts, booklets, videos.

Employee Relations - handling disputes, grievances and

industrial action, often dealing with unions or staff
representatives.

Dismissal - on an individual basis as a result of failure to

meet requirements or as part of a redundancy, downsizing
or closure exercise, perhaps involving large numbers of
people.

Personnel administration - record-keeping and

monitoring of legislative requirements related to equal
opportunities and possibly pensions and tax.

40

Section IV

HR PLANNING:
A working definition
Rigorous HR planning links people management to the
organization's mission, vision, goals and objectives, as well as
its strategic plan and budgetary resources. A key goal of HR
planning is to get the right number of people with the right
skills, experience and competencies in the right jobs at the right
time at the right cost.
The business planning process enables organizations and teams
within an organization to think through:

Mission/goals/objectives: What does the department,

agency or area of responsibility wish to accomplish?
What are the strategic and operational priorities?

Business critical corporate knowledge: What is the

critical corporate knowledge for the business lines in
your organization? Where is it? Who has it?

Resource allocation: Allocation decisions identify

where resources should be applied and have great impact
on the ability to accomplish objectives.

41

Time horizons: The time frame for reaching the

objectives.

Linkages with stakeholders: Increasingly, government

programs are delivered in partnership with multiple
stakeholders. These alliances must be factored into the
planning process.

Performance measures: How will you measure

performance? Do your performance measures link
realistically to the overall business plan? Are they well
defined, relevant, reliable and valid?

The impact of the business plan on people.

42

Vertical Integration of HR Planning

Good HR planning is vertically integrated. It is linked to
strategic planning.

Mission

Organization

Resources

Good HR planning entails understanding the

demographics-know the numbers

Data

Profiles

Projections

Specifically, how will one develop the Human Capital

Investment Plan?

Reskilling: learning, training, etc.

Redeploying: mobility, career assignment program,

"multi-skill" development

Recruiting: targets, campus presence

43

Retaining: high quality, healthy, challenging work

environment

44

Good HR plans address measurement.

The HR Planners of Bank of India meet on an annual basis
to decide on the various policies of the bank. The policies on
which they decide are varied as follows
1. Training Policy
2. Man power Policy
3. Incentive Policy
4. Placement Policy
Recruitment Policy
Banking sector has to have a proper plan in place. As banking
falls in the bracket of service industry, the work force required
by the bank has to be good at interacting with the customers
and thereby provide specialized service so as to satisfy the
customer.
Many banks had gone in for mass recruitment in the late 50s
and the early 60s that is once they were nationalized .The
banks then lacked proper foresight , as a result, during recession
like the one about a couple of years back had to go in for mass
Retirement Schemes in order to reduce the work force.

Year

Computer usage (Bank of

45

India )
1990

4 percent

1996

9 percent

1999

28 percent

2003

92 percent

When asked about this, the manager informed that about ten
years back, 4% of all the operations carried out in the bank
were computerized, this figure increased to 28% about four
years back and today, a mammoth 92% of all the activities are
carried out with the help of computers. This change or rather
this dependence on computers was not envisaged by the HR
planners of the by gone eras. And one cannot hold them
responsible for it, as the growth of computers has been truly
phenomenal and at the same time hard for HR planners to
foresee. Bank of India has gone in for a VRS (Voluntary
Retirement Scheme) in December 2000. The response that
Bank of India got was unexpected, 8000 employees opted for
the VRS. Bank of India has now applied to the government for
one more VRS.
Factors Affecting HR Planning
Type and Strategy Of the Organisation
Organisational Growth Cycle and Planning

46

 Environmental Uncertainties
Time Horizons
Type and Quality Of Forecasting Information
Nature of Jobs being filed
Off- Loading the work
1.
Forecasting Technique: There are number of ways in which
the approximate number of employees needed in the future
can be determined. The techniques for deciding on these
vary from the simple to the sophisticated one. Following are
some of the techniques:
1. Managerial Judgement
2. Ratio-Trend Analysis
3. Work Study Techniques
4. Manpower Productivity

47

Bank of India follows the 4th Technique mentioned above. It

includes deciding the productivity offered by every
employee. The formulae being:
Manpower Productivity:

Total Turnover / number of

employees
Based on this, the forecast is arrived at. Sometimes a mixture of
the above methods is used to arrive at a more proximate
figure.
Manpower Plan is created for a period of 3-4 years and
reviewed accordingly.
The policies of Bank of India are in tune with its organisational
policies , missions and the basic objectives.
The Bank had the set the mission of opening up 50 new
branches in the rural areas by the end of this fiscal year, and
the it did achieve it, but at the same time it has made sure
that the objectives set are not sidelined. That is they havent
cut down on their profits and also the new branches havent
affected the companys decision of providing VRS.

48

(As new branches will need, new recruits)

49

NATURE OF TRAINING AND DEVELOPMENT

In simple terms, training and development refer to the

imparting of specific skills, abilities and knowledge to an
employee. A formal definition of training and development is
.it is any attempt to improve current or future
employee performance by increasing an employees ability
to perform through learning , usually by changing the
employee attitude or increasing his or her skills and
knowledge . The need for training and development is
determined by the employees performance deficiency,
computed as follows:

Training and Development need = standard performance

Actual performance
The term training and development are different from
education. Training as we stated earlier refers to the process of
imparting specific skills education on the other hand is confined
to theoretical learning in classrooms.
Inputs of Training and Development

50

Any training and development program must include inputs

which enable the participants to gain skills learn theoretical
concepts and help acquire vision to look into the distant future.
The inputs include:
Skills: Training includes imparting skills to employees
.various types of skills are basic skills.
Education:
Development
Ethics
Decision Making And Problem Solving Skills

Training and Development in Bank Of India

Bank Of India has been keen to ensure all round development
of its employees and is known for the way it recruits its
employees. They have some the best training college in India.
The main training colleges are located in the metros i.e.
Mumbai, Delhi, Kolkata, Chennai. Other than these metros they
have a Training College in Bangalore and Bhopal.
Bank Of India has a Training Policy .It has different training
modules for different purposes. Its got a Training Policy and
other policies for RECRUITMENT AND INDUCTION,
PROMOTION, etc.

51

INDUCTION AND ORIENTATION:

CLERICAL JOBS : Training period of 2-3 weeks at
any of the training college in the Metros or Bhopal.
OFFICERS POST : Training for a period of 2-3 years
in the Metros.

52

Incase of Promotion , the training policy differs for the

Officers and the Clerks .
Eg. When the bank was updating to the use of computers , it got
its employees trained in the art of using computers at its
Training Office in NERUL.

53

RECRUITMENT

Recruitment is the forgotten tool in the widening participation

toolkit. Participation can only be increased if the target
audience is informed about the company and finds the company
attractive and relevant to their needs. In addition to providing
an interesting aspect of company, the company must know their
target audience; they must know which elements of the
company will appeal to each audience group; and they must
pursue a marketing strategy which effectively informs the
audience about these elements.
The ebb and flow of business can make it difficult for a
company recruiting strategy and budget. A business slowdown
may leave in house recruiters expensively twiddling their
thumbs on full salary or out of jobs. A new initiative may
require hiring 100 skilled professionals
During the past generation, the use of assessments has become
more and more important to employers who wished to put the
right people into jobs, provide effective training, aid managers
in being more productive and promote people into positions
where they would succeed. The use of assessments has resulted
in extraordinary increases in productivity while reducing

54

employee relations problems, employee turnover, stress,

tension, conflict and overall human resources expenses.
Several factors contributed to the failure of traditional hiring
methods. Resumes often contain false claims of education and
experience while they omit information employers would like
to have before making hiring decisions.
References are of little value because most employers will tell
you nothing but "name, rank and serial number" regarding
former employees.
Thus, the interview too often became the most important factor
in deciding whom to hire or promote. But experience has shown
that there is only a coincidental correlation between the ability
to deliver well in an interview and to deliver well on the job.
Studies have pegged this correlation at 14% - one good
employee in every seven hires.

The same applies to Bank of India . The recruiting at the bank is

done as per the norms set by the RBI. . Previously , it can be
said that the company was not subscribing to these theories ,
but in time the bank has understood the importance of selecting
a workforce that will not only help it achieve its goal but also
keeping it attached to the company.

55

Recruitment in Bank Of India

Recruitment in Bank of India has gone down, which is the case
with the entire economy
Till 2002, January, the banks were bounded by the BSRB
(Banking Services Recruitment Board). The country was
divided into zones and 1 bank was given the responsibility of a
zone, then the banks had to communicate with other banks in
that zones, determine their needs and conduct an examination
.the indent was provided to the banks.
After that the chosen candidates would have to go through with
the tests of the individual banks. These banks then had the
autonomy to decide whether to recruit or not as per their liking.
Bank of India also used to follow the same procedure, till 2002
January, after which the government scraped the above process
and the banks were given the authority to select a process,
which suited them the most.
Bank of India has a written test and also conducts Group
Discussions.
The recruitment is sometimes done on compassionate terms,
that is, if an employee dies, then his immediate successor can

56

be given a job. This apply for the clerical post only and also it is
left upto the top management to decide on that factor.
The written test conducted by the bank looks into the various
factors, such as the candidates Technical knowledge, his
interpersonal skills. Etc, whether he has the capability to lead
incase of a higher post.

57

PERFORMANCE APPRAISAL
What is Performance Appraisal?
The performance appraisal is a communication tool designed to
assess each individual's contribution to the company. The
appraisal provides a way to measure skills and
accomplishments with reasonable accuracy and uniformity. It
provides a way to help identify obstacles to top performance. It
should help identify areas for professional growth. It should
not, however, be considered the supervisor's only
communication tool. Open lines of communication throughout
the year help to make effective working relationships.
Each employee is entitled to a thoughtful and careful appraisal.
Its success depends on the supervisor's willingness to complete
a constructive and objective assessment, and on the employee's
willingness to respond to constructive criticism and to work
with the supervisor to overcome performance barriers.
A performance appraisal is a review and discussion of an
employee's performance of assigned duties and responsibilities.
The appraisal is based on results obtained by the employee in
their job, not on the employee's personality characteristics.
Personality should be considered only when it relates to
performance of assigned duties and responsibilities.

58

59

Why Appraise Performance?

Periodic review helps supervisors gain a better understanding of
each employee's abilities with the goal to help train and develop
skills and strengths. It provides a chance to evaluate job
progress, stimulate interest and improve job performance by
recognizing productive work and by pointing out areas of
growth and development. It provides a feedback mechanism
that might otherwise be overlooked.

Nonetheless, the performance appraisal is not only a means to

review performance standards and specific targets. It is a means
to:
1. Identify current job performance levels
2. Identify individual employee strengths and weaknesses
3. Motivate and encourage the individual employee
4. Reward employees for their contribution to organizational
objectives
5. Identify training and development needs
6. Identify potential performance standards
7. Plan future development of the individual
8. Discuss salary, promotion and training
The performance appraisal interview

60

At its simplest, the appraisal interview consists of three steps:

1. setting targets or standards
2. measuring performance
3. planning the appropriate action
A performance appraisal begins with an interview between
manager and employee, an appraisal form is completed, and
action is agreed. The action plan will specify targets to improve
job performance, and indicate what the reward for improvement
is. This reward may be a salary increase, job promotion, an
opportunity to join a management development scheme, or to
enroll in a new training programme.
Methods of reviewing performance
There are different methods of reviewing performance. The
main types are: a management assessment of the employee, a
grading system and a results-oriented approach. The most
common method is results-oriented. One can also have future
oriented methods of evaluation, like the 360degrees, MBO,
etc.
Management assessment of employee: The manager writes a
brief report commenting on the personality and characteristics
of an employee. There may be a list of criteria to check against
such as behavior, appearance, reliability and enthusiasm. The

61

manager is asked to note the employee's ability to achieve

targets.
Grading system: This is similar to the assessment review. The
manager is given a list of categories to be assessed. This is done
by selecting a grade which matches the employee's
performance. Topics are related to employee effort, enthusiasm
to begin and complete new tasks, the ability to work with others
and qualities of leadership. This system may ask for a simple
form of grading such as:
-- Excellent
-- Very Good
-- Satisfactory
-- Poor
-- Very poor
Another type of grading system uses numerical scoring. A list
of criteria is assessed by assigning points to each item. The
points are added together and compared to a total potential
score.
Disadvantages of grading and assessment: the main
disadvantage of management assessment and grading is that
they are subjective - there is little or no input from the
employee. They are not sound techniques to define standards of

62

performance, or to assess and address training needs for the

employee.
Cost Accounting Method: This method evaluates performance
from the monetary returns the employee yields to his or her
organisation. A relationship is established between the cost
included in keeping the employee and the benefit of the
organisation derives from him or her . Performance of the
employee is then evaluated based on the established
relationship between the cost and the benefit.
Comparative Evaluation Method: as the name suggests
comparative evaluations are done by the supervisors . These
include the ranking method and the paired-comparison method
Results-oriented appraisal: this is based on performance
standards or specific targets. The manager and employee agree
set targets which are relevant to the employee's job role, the
department, and the organization as a whole. The targets or
standards are set with a future incentive in mind. This may be a
promotion, salary increase, or a transfer into another
department.
In a results-oriented system the targets which are set may be
quantitative (measurable) goals or qualitative (motivational)
goals. A quantitative target is to increase productivity by 5 per

63

cent, reduce budgetary costs by l() per cent, or increase overall

sales by 15 per cent.
A qualitative target is motivational and related to behavior. For
example, to effect better relations with trade customers, to
create a spirit of teamwork in a small department, or to learn
how to control a short temper.
360 DEGREES APPRAISAL FEEDBACK
In this kind of appraisal, multiple raters are involved. The 360
degrees technique is understood as a systematic collection of
performance data on an individual or a group, derived from
number of stakeholders the stakeholders being the immediate
supervisors, team members, customers, peers and self.
This kind of appraisal is not followed at Bank of India
What are the pros and cons?

Pros: can be a useful development tool in motivating and

retaining employees in a buoyant, fluid job market. They
provide a chance to offer incentives to keep staff and their
accruing knowledge within the company.

Cons: can amount to nothing more than a pepped-up pay

64

review. If handled poorly, for example, making people feel

undervalued and their efforts unrecognised, appraisals can
damage morale and company loyalty. Ideally appraisal should
be an ongoing process and if an annual event, it can be a case of
too little too late.

Performance Appraisal in Bank of India:

Bank of India follows a past oriented method of performance
appraisal; its a combination of COST ACCOUTNING
METHOD and COMPARATIVE EVALUATION
APPROACHES. Proper care is taken that employees are
given a fair appraisal.
Appraisal for the Clerical staff is done on need basis , i.e. as
and when a need for extra help is required for some of the posts
above the clerical post , clerks are appraised .
Appraisal for the Officers is different, no matter what the state
of affairs in the bank; officers are due for appraisals on an
annual basis.
For both the cases, its the KEY RESPOSIBILTY AREAS to
which major attention is paid.

65

Officers are required to fill up a form which has to be submitted

to the reporting or the reviewing authority (ANNEXURE 1).
Then the reviewing authority will go through it and have a
personal session with the applicant and come to a conclusion.
Bank of India lays more emphasis to some factors like
Commitment to task assigned
Devotion to Duty
Human Relations
Leadership Abilities
Public Relations
Intellectual honesty, creativity and Innovative Qualities
Quality of Performance and Application of Knowledge
Application of Delegated Authority and Decision Making
Abilities
Conceptual and Professional skills on the Job
Stress Tolerance and Overall Suitability for higher
position

The forms has many criterias to look into the above described
qualities of the appraisee and on that basis the reviewing

66

authority judge whether the applicant is capable of being

promoted or not.

67

PROMOTION

Historically, employers have depended upon resums,

references and interviews as their sources of information when
making hiring decisions. In practice, these have proved to be
inadequate for consistently selecting good employees. When
training employees, a "one size fits all" approach has failed to
provide the desired results. When selecting people for
promotion, otherwise excellent employees have too often been
miscast into roles they could not perform satisfactorily. Clearly,
an essential ingredient for making "people decisions" has been
missing from the formula.
Promotions mean an improvement in pay, prestige, position and
responsibilities of an employee within his or her organisation.

Purpose of Promotion
1. To motivate employees towards higher productivity
2. To attract and retain the services of qualified and
competent people
3. To recognize and reward the efficiency of an employee
4. To increase the effectiveness of the employee and the
organisation
5. To fill up higher vacancies in the organisation

68

Promotion is a double edged sword. If handled carefully, it

contributes to employee satisfaction and motivation. If
mishandled, it leads to discontentment, frustration, scepticism
and bickering among the employees.
There are different types of promotions
1. Horizontal Promotion
2. Vertical Promotion
3. Dry Promotions

Promotions in Bank of India

Promotions are, basically, Sub-Staff onwards
Sub-Staff

Clerk

Officer

Sub-Staff look after the petty matters like making entries in the
muster, searching for files, etc, while the Clerks have to help in
the actual working of the bank.

As per the policies of the banks, placements have to take place

on an 80-20 basis i.e.

69

If one hundred employees , is the number, that has been decided

by the bank to be promoted and recruited , then , 80 employees
will be from the bank , i.e. promoted from lower ranks and 20
employees will be from the open market i.e. recruited.
This kind of policy ensures that the employees within the
organisation also get a fair chance and dont loose out to the
new recruits.
Sometimes the recommendations are carried out on a 50-50
basis , which means that if some recommendations are received
for a 10 post then only 5 posts are filled with those
recommendations while the remaining are subjects to the
method mentioned above.
Officers and Sub-Staff have to go through a written test and
also give an interview in order to get promoted from their
respective cadres. These test are supposed to help the reviewing
authority determine if that individual is ready for the added
responsibility.
As many a times it had been noticed before in this organisation
that the person promoted to a higher post found it
uncomfortable and couldnt cope with the extra pressure that
comes along with the prestige of being promoted to that post.

70

71

EMPLOYEE WELFARE AND BENEFITS

As a part of development of the employees, the company
strongly believed in the importance of providing Employee
welfare schemes.
The Stress factor among its employees is a cause of primary
concern for any company. It has been a fact that many
development plans has been rendered by ever increasing
population. Acknowledging the fact and with a view to
contribute its share towards controlling the stress, the bank had
initiated various programmes among its employees.
A very real, clear and present danger lurks just beyond the
consciousness of most people who work together eight to ten
hours a day, five to seven days a week. It is the potential for
stress to occur in your workplace. Increasingly, the Human
Resources function is both the target of these threats of stress
and the organization's first line of defense for prevention.
Welfare means faring or doing well. It is a comprehensive
term , and refers to the physical , mental , moral and emotional
well being of an individual. The term welfare is a relative
concept, relative in time and space. It, therefore, varies from
time to time, from region to region and from country to country.

72

Labour welfare, is a term which must necessarily be elastic,

bearing a somewhat different interpretation in one country from
another, according to the different social customs, the degree of
industrialization and the educational level of the workers.

73

Types of Welfare Activities

The welfare measures can be divided into 2 broad groups,
namely:
1. Welfare measures inside the work place
2. Welfare measures outside the work place

Welfare measures inside the work place

Conditions of work environment: like safety,
cleanliness, convenience and comfort during work.
Convenience: like urinals drinking water
Workers health services, Workers Recreation
Welfare measures outside the work place
Housing , Family Residences according to types
and rooms
Intra Mural Facilities
Extra Mural Facilities

these would include

amusement and sports , educational facilities

Employee welfare in Bank of India

74

Bank of India does have an Employee Welfare plan in place.

75

Medical Allowance and Hospitalisation: This facility is

different for the Officers and Clerical Staff. Below the table
showcases the medical benefits enjoyed by the Officers and the
award staff
Hospitalization
Officers

Sub Staff

Domiciliary
No Limit, based on
No Limit , Ceilings the
prescriptions
as per the Rules led and bills,
down
by
the
government ,and also Consultants
Grade wise
(Max.)Rs 50000
Limited by the Bank Limit set by the
to a fixed amount bank.
and depends on the
declaration made

As one can see here, the Officers do enjoy better facilities than
the award staff, but at the same time, enough care has been
taken of the clerical staff.

Contributory Provident Fund:

A kind of fringe benefit that employers offer to motivate
employees and serve as a source of long-term saving for
employees retirement. It can be set up voluntarily with the
cooperation between employers and employees in order to

76

provide financial security for employees in the case of death,

employment termination, or resignation from the fund.
Employees contribute 10 % of their basic salary which is the
same amount contributed by the bank.
Bank has introduced terminal schemes for the employees as
follows:
1. Pension or
2. Provident Fund (Banks Contribution)
Incase of the Employees who have opted for the former
scheme, they will not be entitled for the banks share toward
their own contribution.

77

EMPLOYEES WELFARE
Government permits 3 % of net profit towards Employees
Welfare upto Rs. 10 crores. No differentiation is made in this
respect between the Officers and the Award Staff.
The Amount is used towards the following activities:
1. Educational
2. Entertainment /Canteen
3. Sports
4. Holiday Homes (35 places all over India for staff
members)
Holiday homes have to be booked in advance as there had been
cases where some employees used to rent it out to third parties.

Leave Fare Concession:

Officers

Clerical Staff

Once In 2 Years

3000 km Air Fare

3000 km. First

Class Railway Fare

Once In 4 Years

6000 km Air Fare

6000 km First Class

Railway Fare
(

to and fro)

78

Children Education Allowance:

This is limited to Rs.1500 per child upto 2 children for the SubStaff. This figure goes on decreasing as the post goes on
increasing as it is the thinking of the Bank that it is the lower
strata of the society who needs more help.
D.A. is reviewed every third month, based on Consumer
Price Index.
Loans to Employees
1. Concessional Housing Loan Facility
2. Vehicle Loan (Interest Free upto Rs. 25000) Petrol
Allowance for the Officers also included.
3. Consumer Loan
4. Clean OD: is limited upto Rs. 2 lacs for the Sub-Staff,
Rs. 3.5 lacs for the Clerical Staff and Rs. 5 lacs for
Officers

79

80

CONCLUSIONS AND RECOMMENDATIONS

1. Participative Management:
There is no sign of Participative Management in
Bank of India. They could improve upon this aspect, as it
help the employees make changes in the management as
they have come face to face with the actual problems that
are faced by them.
Participation through Suggestion Schemes
Participation through Quality Circles
Participation at the Board Level
2. Performance Appraisal:
Bank of India doesnt have a 360 Degree appraisal in
place. 360 Degrees appraisal is one of the best techniques
to evaluate the performance of the employee. Again the
appraisal in done on need basis for the Sub-Staff. This
practice should be discontinued with immediate effect.
Sub-Staff should be evaluated based on their
performance even if there is no scope for promotion. This
will create a feeling of well being within the organisation
especially among the Sub-Staff. Psychological
Assessment will also help the organisation, as that kind

81

of an appraisal takes into account the future potential of

that employee and not his past records.
Transparency in this aspect leaves a lot to be desired
form the Bank.

82

3. MBO:
Management by Objectives is still a vague term in Bank
of India. It would go a long way in helping the bank
achieve its organisational goals with much ease and
without any unwanted conflicts. It involves setting
objectives and making plans for achieving those
objectives.

4. Turnover Rate:
Banks normally do not have a high employee turnover
rate. The banks use this fact to their advantage and the
efforts towards the improvement of employee morale are
not upto the mark. The conditions within the bank
branches could be made more comfortable for the
employee; this includes using more motivating
techniques to enhance the employee morale.

83

Annexure
Performance Appraisal Form: page 1

84

Annexure
Performance Appraisal form: page 2

85

Annexure
Performance Appraisal Form: page 3

86

BIBLIOGRAPHY
Human Resource and Personal Management (Text and Cases)
- K. Aswathappa, 3rd
Edition
Personnel Management (Text and Cases)
- C.B. Mamoria and
S.V. Gankar
Bank of India Annual Report 2002
Websites:
http://www.hr-guide.com/
http://fic.wharton.upenn.edu/
http://humanresources.about.com/library/
http://www.shrm.org/memberkit/
http://www.hr.com/

87