Human Capital Management Human Capital Every organization invests

Human Capital Management

Human Capital • Every organization invests its money and resources to train new employees. Employees in turn work hard, upgrade their existing knowledge and contribute in their own way to increase the productivity of their organization. • The word “Human Capital” was introduced by A. W. Lewis in “Economic Development with Unlimited Supplies of Labor”. • Human capital plays a crucial role in increasing the productivity and output of an organization.

What is Human Capital Management • Human Capital management refers to managing an organization’s employees for them to contribute significantly in the overall productivity of organization. In a layman’s language managing workforce of an organization refers to human capital management. • In simpler words, upgrading the existing skills of an employee and extracting the best out of him/her refers to human capital management.

Importance • Orienting to the organization • Making a new employee feel comfortable • Trains employees in order to constantly upgrade their skills • Retaining employees • Making employees self sufficient and prepare them for adverse conditions

Benefits of human capital management in banks • Helps in extracting the best out of employees. • Enables the human resource professionals to hire the right candidate for the right role. • Enables free flow of information between superiors and subordinates. • Trainings and skill development for upgrading the existing knowledge of employees. • Soft skills and personality development for employees.

Ways to Increase Human Capital in Banks 1. Constant Trainings 2. Monitoring Performance 3. Direct Communication 4. Defined Job Responsibilities 5. Motivation

HRM in Banking • Present day business approaches view and express the workers in terms of resource. They are dealt with as most vital resource named as "Human Capital". The expression "Human Capital" is in some cases utilized synonymously with "human resources",

HRM in Banking • The banking industry is a highly regulated powerhouse that stabilizes the economic environment of nations around the world. • Bank employees, from executives to tellers, must have a higher level of integrity and trustworthiness than employees in most other industries, making the role of HR in banking that much more important.

The Human Resources functions of Banks • Corporate HR : - There are 3 - teams namely: – HR Administration that handles HR admin activities like promotions, deployment, transfer exercises etc. – HR Operations : - This team handles functions related to terminal benefits, centralized payroll, claim processing, HR back office functions, etc. – Strategic HR & OD which basically includes new HR initiatives /Projects, etc. and other developmental & OD interventions.

HR Objectives in Banks • To initiate & institutionalize globally competitive HR practices in the Bank in pursuit to become a Bank of International Standards and to become an employer of preferred choice. • To create a performance-driven culture and productive workplace for the employees. • To create a pool of managers and business leaders for future. • To create a learning organization for employees’ intellectual growth and creativity. • To re-skill the workforce to operate in digitally enabled modern core banking environment.

HR Objectives in Banks • To achieve and maintain good human relationships within the Banks. • Maximum personal contribution to the effective working of the bank. • To ensure respect for human personality and the well-being of each individual. • To ensure maximum individual development of personnel. • To ensure satisfaction of various needs of individuals for achieving their maximum contribution towards banking goals.

Emerging Challenges for Human Resources • Though, lot of efforts have gone into bringing technological & process equivalence in the recent years, very little has been done on human resource front by PSBs, which is cause of some immediate concern. The emerging challenges are:

1. Massive Retirements • The current decade can be known as ‘Retirement Decade’ which is likely to pose demographic risk. As per BCG Report around 80 percent of middle management and 50 percent of the Junior officers will be attaining superannuation by 2020. • PSBs are going to face unprecedented problems in the area of HR in the next few years as crucial competencies and know-how will be lost especially in senior management and middle management levels.

2. Employee Mix • Historically, banks have been adopting a uniform three-tier Human Resource (HR) model where the frontline staff (mostly clerks) undertakes entry related jobs, the officers authorizes such transactions; and the movement of ledgers/vouchers are being carried out by subordinate staff. • To cope up with the demand, banks should continue to recruit staff with proper mix in upcoming years.

3. Suboptimal utilization of Sub-ordinates • Banks need to adopt suitable redeployment exercises and also upgrade subordinate staff skills to promote them to clerical cadre in a phased manner for optimum use of their services for business development.

4. Talent Acquisition • Attracting talent and retention of talent have emerged as latest challenges in the light of dynamic economic, social and demographic environment. • The future banking space demands total transformation in the area of recruitment, training and deployment of staff and the banks need to focus more attention in this regards.

5. Re-skilling • A recent survey on Transforming Indian Banking has very interesting findings — 30 per cent of customers surveyed said they do not feel emotionally attached to the bank and given a chance would not select the same bank again nor would they recommend it to friends and family. • The answer to this wariness is obvious — poor customer service which can be addressed through relationship banking.

6. Talent Retention • PSBs are necessitated to focus attention on employer Branding, Integration of HR with strategic vision & mission. • Business goals and introduction of performance linked placements, promotions and incentives to retain the talent besides initiating the steps to enhance the skill sets of the employees on an ongoing basis through appropriate training programs.

7. Performance Management System • Commercial banks should throw up future leaders, who are expected to do three important things viz. , Plan, Inspire and Deliver. A time has come to PSBs to introspect whether they are on the right track to groom the leaders within the organization. • The need of the hour is to draw senior/experienced people and form a team with a specific assignment of “Career Coach & Mentor” to execute comprehensive plan of “Future Leaders”. • By adopting proper system, they can manage performance appraisal.

Conclusion • Banks need to have pool of qualified and potential work force especially at top level not only to lead the team at present but also to meet the future requirements of the organization. • Although most PSBs identify succession planning is an important but little has been done in this regard.