Hrm in Insurance (100 Marks Project)

8/12/2019 Hrm in Insurance (100 Marks Project)

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INTRODUCTION TO HUMAN RESOURCES:

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 resource is variously defined in political economy and

economics, where it was traditionally called labor, one of three factors ofproduction. ts use within corporations continues to define common

conceptions of the term.

Modern analysis emphasi!es 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 civili!ation. The broad term human capital has evolved to

contain the comple#ity of this term, and in macro$economicsthe term "firm$

specific human capital" has evolved to represent the original meaning of

term "human resources".

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What is Management?

Management is concerned with the human beings whose behavior is highly

unpredictable. &ver since people began forming groups to achieve as

individuals. Managing has been essential to provide the coordination of

individual's efforts.

Management does not perform specific jobs. t motivates other people to

perform specific jobs. t indicates a total process of e#ecutive control in

business. t implies undertaking of responsibility for effective planning,

policy making, and fi#ation of targets and operative functions of providing

men, money and materials to run day$to$day administration. Management is

concerned with actually directing and guiding the operations to achieve

business objectives. t uses human efforts to reach the predetermined goals.

Regulation, (ontrol and evaluation of human efforts in the direction of

achieving the given objectives are the primary functions of management.

)lso, management refers to bringing together of physical and human

resources to carry on planned activities and control performance in order to

ensure that what is done is what is expected. Management is applicable to

both profit$making and service$rendering organi!ations.

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Nature of Management

(!" Management as an e#onomi# resour#e:

Historically, land and capital were treated as sources of production. +ow

along with land and capital, labor and management are given the status of

economic resource. Management coordinates as well as controls economic

resources. t facilitates effective use of other resources for achieving specific

objectives.

($!" Management as a s%stem of authorit%:

) manager is given specific duties and also the authority. He has to achieve

certain results with the participation of others. He has to get the work done

through the others. ) manager can achieve results through delegated

authority as per the need of the situation.

(&!" Management is a grou' a#tiit%:

Management is not individualistic but a joint activity. Managers have to

guide and motivate their subordinates. Management is an activity of a group.

Results will not be achieved only by the managers but also bt the

cooperation and participation of subordinates.


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(+!" Management is innoatie:

Management techni/ues are dynamic and innovative. 0uch techni/ues are

adjusted as per the re/uirements of the situations. )nother manager need not

repeat the decisions of one manager. 0imilarly, a manager has to change his

decisions under different situations.

Nee, for Management

(!" Dire#tion an, #ontro) of grou' efforts:

n business, many persons work together. They need proper direction,

guidance and even motivation for raising their efficiency. n the absence of

guidance, people will work as per their desire and the orderly working of

enterprise will not be possible. Management is needed for guiding

employees in the right direction and for coordinating their efforts.

($!" Or,er)% a#hieement of -usiness o-.e#ties:

&fficient management is needed in order to achieve the objectives of

business activity in an orderly and /uick manner.

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(&!" /erforman#e of -asi# manageria) fun#tions:

2lanning, organi!ing, coordinating and controlling are the basic functions of

management. Management is needed as these functions are performed

through the management process.

(*!" Effe#tie #ommuni#ation at a)) )ee)s:

Management is needed for effective communication within and outside the

organi!ation.

(+!" Motiation of em')o%ees:

Management is needed for motivating employees and also for coordinating

their efforts to achieve business objectives /uickly.

(0!" Su##ess an, sta-i)it% of the -usiness enter'rise:

&fficient management is needed for success, progress and smooth

functioning of a business enterprise

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Im'ortan#e of Management

The importance of management in business is universally accepted. Modern

business is highly competitive and needs efficient and capable management.

t is through management that business activities are organi!ed and

conducted efficiently. 4ollowing are few of the points that suggest the

importance of management-

(!" O'timum use of resour#es:

Management facilities optimum utili!ation of human and physical resources,

which leads to progress and prosperity of a business enterprise.

($!" Com'etitie strength:

Management develops competitive strength in an enterprise. This enables an

enterprise to develop and e#pand its assets and profits.

(&!" Motiates em')o%ees:

t motivates employees to take more interest and initiatives in the work

assigned and contribute for raising productivity and profitability of the

enterprise.

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(*!" E1'ansion of -usiness:

pansion, growth and diversification of a business unit are possible

through efficient management. t creates good corporate image to a business

enterprise.

(+!" Re,u#es turnoer an, a-senteeism:

t reduces labor turnover and absenteeism and ensures continuity in the

business activities and operations.

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HUMAN RESOURCE MANA2EMENT

Human Resour#e Managementor /ersonne) managementis the activity

of managing personnel, usually employees.

n any organi!ation, managing personnel is the process of making sure the

employees 7not the customers8 are as productive as they can be. This can

include hiring, firing, or transferring people to9from jobs they can do most

productively.

This subject is a major at many universities, or a minor in the business

school. t is also known aspersonnel administration, which is functionally

an e/uivalent term.

Meaning of Human Resour#e Management:

) business unit needs employees to look after different activities. This is

called manpower or human resource. 0uch human resource needs to be

developed fully so that it will make positive contribution for the progress

and prosperity of a business unit. 4or this systematic development and

management of human resources is necessary. Human Resource

Management 7HRM8 deals with-

7a8 Training

7b8 0elf$development

7c8 2romotions

7d8 2erformance appraisal of manpower recruited in an organi!ation.

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HRM is an organi!ed learning e#perience aimed at matching the

organi!ational need for career growth and development. t is a process

involving series of learning activities designed to ac/uire desired level of

competence among employees.

HRM is a continuous process and it needs money. 0uch investment creates a

team of efficient, skilled and trained manpower which brings success and

stability to a business unit. HRM programmes offer long term benefits to an

organi!ation.

Chara#teristi#s of Human Resour#e Management:

7%8. U'gra,ing Man'o3er:

HRM is basically concerned with the upgrading of manpower working

in an organi!ation. This leads to improvement in the individual performance

of an employee and also corresponding improvement in the organi!ational

performance.

7*8. Stress on Training:

HRM includes various schemes arranged for providing education,

guidance, training and opportunities to learn and develop employees of all

categories and working in different departments. There is an integrated use

of sub$systems 7training, career developments, organi!ational development8

in the HRM programme.

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78. Attention to )earning an, #areer ,ee)o'ment:


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business world. HRM programmes create matured, skilled and efficient

manpower, which is a valuable asset of a business unit.

758. Termination of Em')o%ment:

Termination is an unpleasant part of any manager's job. &mployees

occasionally must be terminated for breaking rules of failing to perform

ade/uately.

768. Continuous A#tiit%:

HRM is rightly treated as a continuous activity due to new

developments taking place regularly in the business world. 4or this, on the

job and off the job training programmes are introduced from time$to$time.

7:8. Wi,e S#o'e:

The scope of HRM programmes is very vast. t is multi$disciplinary in

character. Training and guidance are given on different aspects of business

management to enable managers to deal with comple# managerial problems

and challenges.

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NEED AND IM/ORTANCE O5 HUMAN RESOURCE

MANA2EMENT:

7%8. To #reate sta-)e )a-or for#e:

HRM programmes are needed in order to create stable, efficient, skilled

and matured manpower re/uired by an enterprise for the present and future

period.

7*8. To u',ate the 6ua)it% of man'o3er:

HRM activities are needed for updating the /uality of manpower as per

the growing and changing needs of an enterprise. This avoids managerial

obsolescence. &ven the vacancies at higher levels can be filled in internally

due to HRM programmes as they provide training and opportunities of self$

development to employees working at lower levels.

78. To ,ee)o' strength for suria):

HRM programmes are necessary for survival in the present competitive

marketing environment. )n enterprise can face market competition only by

improvimg /uality, reducing costs and avoiding wastages. )ll this is

possible through HRM.

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78. To fa#e #ha))enges of te#hno)ogi#a) #hanges:

Technological changes are taking place rapidly in every area of

business. HRM programmes are needed in order to absorb technological

changes taking place with speed. n fact, introduction of new technology,

computers, automation, etc. will not be possible unless training is provided

to the manpower.

718. To satisf% the ,eman, of se)f7,ee)o'ment of em')o%ees:

HRM is needed to meet the needs of employees in regard to self$

development and career development aspirations. &mployees demand,

training facilities, refresher courses, promotions and transfers, career

guidance, etc. for their self$development. HRM programmes are needed to

fulfill self$development and career development of employees.

738. To meet future man'o3er nee,s:

HRM is needed to meet the future manpower needs of the organi!ation.

ecutives, managers, supervisors leave the job or retire due to age factor.

(ompetent juniors must take their positions. HRM is needed in order to keep

ready a team of competent managers as a second line of defense.

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758. To fa#i)itate e1'ansion an, ,iersifi#ation:

HRM activities are needed to meet the manpower re/uirements resulting

from e#pansion and diversification programmes undertaken at the enterprise

level. )ttention should be given to HRM much before the introduction of

e#pansion programme.

768. To uti)i4e 'ro,u#tion #a'a#it% fu))%:

HRM is needed in order to use the available production capacity to the

optimum level. t provides skilled manpower for this purpose.

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SCO/E O5 HUMAN RESOURCE MANA2EMENT:

7%8 Training:

Training is an essential element of HRM. This develops skills and

capacity to work at higher levels and positions. Training is possible

by different methods. t is useful for self$development and career

development.

7*8. /erforman#e A''raisa):

2erformance appraisal is an important area of HRM. The purpose of

performance appraisal is to study critically the performance of an employee

and to guide him to improve his performance. )n employee is told about his

strengths and weaknesses and assistance is given to remove weaknesses and

make the plus points more strong. This techni/ue is useful for building a

team of capable employees and is also used for their self$development.

78. /otentia) A''raisa)-

t relates to the study of capabilities of employees. t is useful for proper

placement and career development of employees. 2otential appraisal of

employees is useful for developing their special /ualities, which can be used

fruitfully along with the e#pansion and diversification of activities of the

company. 2otential appraisal is possible by the superior with the help of

different methods.

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78. Career ')anning an, ,ee)o'ment:

=nder HRM employees should be given guidance for their self$

development and career development. The opportunities likely to develop

in the organi!ation should be brought to their notice. They should be

motivated for self$development, which is useful to the organi!ation in the

long run. 0uperiors are supposed to provide information and guidance to

their juniors in this regard. (areer development is an integral part of

HRM.

718. Em')o%ees 3e)fare:

&mployee's welfare is within the scope of HRM. >elfare facilities are

useful for creating efficient and satisfied labor force. 0uch facilities raise the

morale of employees. &mployee's welfare includes the provision of medical

and recreation facilities, subsidi!ed canteen, free transport and medical

insurance. 0uch facilities support training and other measures introduced for

HRM.

738. Re3ar,s an, in#enties:

HRM includes provision of rewards and incentives to employees to

encourage them to learn, to grow and to develop new /ualities, skills and

e#periences which will be useful in the near future. Reward is an

appreciation of good work. t may be in the form of promotion, higher salary

or higher status. Rewards and incentives motivate employees and raise their

morale.

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758. Organi4ationa) ,ee)o'ment:

HRM aims at providing conflict$free operations throughout the

organi!ation. t also keeps plans ready to deal with problems like

absenteeism, turnover, low productivity or industrial disputes.

768. 8ua)it% of 3or9 )ife:

?uality of work life depends on sound relations between employers and

employees. ) forward looking policy on employee benefits like job security,

attractive pay, participative management and monetary and non$monetary

rewards will go a long way in improving the /uality of work life helps

employees to strike an identity with the organi!ation.

7:8. Human resour#e information s%stem:

0uch system acts as an information bank and facilities human resource

planning and development in a proper manner. t facilitates /uick decision

making in regard to HRM. &very organi!ation has to introduce such system

for ready reference to HRM matters. =pdating of such information is also

essential.

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HUMAN RESOURCE MANA2EMENT SSTEMS:

Human Resour#e Management S%stems (HRMS; EHRMS!, Human

Resour#e Information S%stems (HRIS!, HR Te#hno)og%or also called

HR mo,u)es, shape an intersection in between human resourcemanagement

and information technology. t merges HRM as a discipline and in particular

its basic HR activities and processes with the information technology field,

whereas the planning and programming of data processing systems evolved

into standardised routines and packages of enterprise resource planning

7&R28 software. @n the whole, these &R2 systems have their origin on

software that integrates information from different applications into one

universal database. The linkage of its financial and human resource modules

through one database is the most important distinction to the individually

and proprietary developed predecessors, which makes this software

application both rigid and fle#ible.

The HR fun#tion


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introducing innovative HRM09H(M technology. Aue to comple#ity in

programming, capabilities and limited technical resources, HR e#ecutives

rely on internal or e#ternal T professionals to develop and maintain their

Human Resource Management 0ystems 7HRM08. Before the "client$server"

architecture evolved in the late %:6;s, every single HR automation process

came largely in form of mainframe computers that could handle large

amounts of data transactions. n conse/uence of the high capital investment

necessary to purchase or program proprietary software, these internally

developed HRM0 were limited to medium to large organisations being able

to afford internal T capabilities. The advent of client$server HRM0

authorised HR e#ecutives for the first time to take responsibility and

ownership of their systems. These client$server HRM0 are characteristically

developed around four principal areas of HR functionalities- %8 "payroll", *8

time and labour management 8 benefits administration and 8 HR

management.

The 'a%ro)) mo,e): automates the pay process by gathering data on

employee time and attendance, calculating various deductions and ta#es, and

generating periodic payche/ues and employee ta# reports. Aata is generally

fed from the human resources and time keeping modules to calculate

automatic deposit and manual che/ue writing capabilities. 0ophisticated

H(M systems can set up accounts payable transactions from employee

deduction or produce garnishment che/ues. The payroll module sends

accounting information to the general ledger for posting subse/uent to a pay

cycle.

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The time an, )a-our management mo,u)e: applies new technology and

methods 7time collection devices8 to cost effectively gather and evaluate

employee time9work information. The most advanced modules provide

broad fle#ibility in data collection methods, as well as labour distribution

capabilities and data analysis features. This module is a key ingredient to

establish organisational cost accounting capabilities.

The -enefit a,ministration mo,e): permits HR professionals to easily

administer and track employee participation in benefits programs ranging

from healthcare provider, insurance policy, and pension plan to profit

sharing or stock option plans.

The HR management mo,u)e: is a component covering all other HR

aspects from application to retirement. The system records basic

demographic and address data, selection, training and development,

capabilities and skills management, compensation planning records and

other related activities. %8 payroll, *8 time and labour

management, 8 benefit administration and 8 HR management. >hile using

the internet or corporate intranet as a communication and workflow vehicle,the HRM09H(M technology can convert these into web$based HRM0

components of the &R2 system and permit to reduce transaction costs,

leading to greater HR and organisational efficiency. Through employee or

manager self$service 7&00 or M008, HR activities shift away from paper

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based processes to using self$service functionalities that benefit employees,

managers and HR professionals alike. (ostly and time consuming HR

administrative tasks, such as travel reimbursement, personnel data change,

benefits enrolment, enrolment in training classes 7employee side8 and to

instruct a personnel action, authorise access to information for employees

7managers side8 are being individually handled and permit to reduce HR

transaction time, leading to HR and organisational effectiveness.

(onse/uently, HR professionals can spend fewer resources in managing

administrative HR activities and can apply freed time and resources to

concentrate on strategic HR issues, which lead to business innovation.

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THE TWO THEORIES WHICH SU//ORT HUMAN RESOURCE

MANA2EMENT"

THEOR AND THEOR

Theor% and Theor% are theories of human motivation developed by

Aouglas McCregorat the MT 0loan 0chool of Managementin the %:3;s

that have been used in human resource management, organi!ational

behavior, and organi!ational development. They describe two very different

attitudes toward workforce motivation. McCregor felt that companies

followed either one or the other approach.

Theor%

n this theory management assumes employees are inherently la!y and will

avoid work if they can. Because of this workers need to be closely

supervised and comprehensive systems of controls developed. )n

hierarchical structure is needed with narrow span of controlat each level.

)ccording to this theory employees will show little ambition without an

enticing incentive program and will avoid responsibility whenever they can.

)ccording to McCregor, most managers7in the %:3;s8 tend to subscribe to

Theory D, in that they take a ratherpessimisticview of their employees. )

Theory D manager believes that his or her employees do not really want to

work, that they would rather avoid responsibility and that it is the managers

job to structure the work and energi!e the employee. The result of this line

of thought is that Theory D managers naturally adopt a more authoritarian

style based on the threat of punishment.

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Theor%

n this theory management assumes employees are ambitious, self$

motivated, and an#ious to accept greater responsibility, and e#ercise self$

control and self$direction. t is believed that employees enjoy their mental

and physical work activities. t is also believed that employees have the

desire to be imaginative and creative in their jobs if they are given a chance.

There is an opportunity for greater productivity by giving employees the

freedom to be their best.

) Theory E manager believes that, given the right conditions, most peoplewill want to do well at work and that there is a pool of unused creativityin

the workforce. They believe that the satisfaction of doing a good job is a

strong motivation in and of itself. ) Theory E manager will try to remove

the barriers that prevent workers from fully actuali!ing their potential.

M#2regor an, Mas)o3


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Chara#teristi#s of the Theor% Manager

Results$driven and deadline$driven, to the e#clusion of everything

else

ntolerant

ssues deadlines and ultimatums

Aistant and detached

)loof and arrogant

&litist

0hort temper

0houts

ssues instructions, directions, edicts

ssues threats to make people follow instructions

Aemands, never asks

Aoes not participate

Aoes not team$build

=nconcerned about staff welfare, or morale

2roud, sometimes to the point of self$destruction

@ne$way communicator

2oor listener

4undamentally insecure and possibly neurotic

)nti$social

vengeful and recriminatory

Aoes not thank or praise

>ithholds rewards, and suppresses pay and remunerations levels

0crutinises e#penditure to the point of false economy

0eeks culprits for failures or shortfalls

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0eeks to apportion blame instead of focusing on learning from the

e#perience and preventing recurrence

Aoes not invite or welcome suggestions

Takes criticism badly and likely to retaliate if from below or peer

group

2oor at proper delegating $ but believes they delegate well

Thinks giving orders is delegating

Holds on to responsibility but shifts accountability to subordinates

Relatively unconcerned with investing in anything to gain future

improvements

=nhappy

Managing an Theor% -oss

>orking for an D Theory boss isnt easy $ some e#treme D theory managers

can be e#tremely unpleasant $ but there are ways of managing these people

upwards. )voiding confrontation 7unless you are genuinely being bullied8

and delivering results are the key tactics.

Theory D managers 7or indeed theory E managers displaying theory D

behaviour8 are primarily results oriented $ so orientate your own discussions

and dealings with them around results $ ie what you can deliver and when.

Theory D managers are facts and figures oriented $ so cut out the incidentals,

be able to measure and substantiate anything you say and do for them,

especially reporting on results and activities.

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Theory D managers generally dont understand or have an interest in the

human issues, so dont try to appeal to their sense of humanityor morality.

0et your own objectives to meet their organisational aims and agree these

with the managersG be seen to be self$starting, self$motivating, self$

disciplined and well$organised $ the more the D theory manager sees you are

managing yourself and producing results, the less theyll feel the need to do

it for you.

)lways deliver your commitments and promises. f you are given an

unrealistic task and9or deadline, state the reasons why its not realistic, but be

very sure of your ground, dont be negativeG be constructive as to how the

overall aim can be achieved in a way that you know you can deliver. 0tand

up for yourself, but constructively $ avoid confrontation. +ever threaten or

go over their heads if you are dissatisfied or youll be in big trouble

afterwards and life will be a lot more difficult.

f an D theory boss tells you how to do things in ways that are not

comfortable or right for you, then dont /uestion the process, simply confirm

the end$result that is re/uired, and check that its okay to streamline the

process or get things done more efficiently if the chance arises $ theyll

normally agree to this, which effectively gives you control over the how,

provided you deliver the what and when. )nd this is really the essence of

managing upwards D theory managers $ focus and get agreement on the

results and deadlines $ if you consistently deliver, youll increasingly be

given more leeway on how you go about the tasks, which amounts to more

freedom. Be aware also that many D theory managers are forced to be D

theory by the short$term demands of the organisation and their own

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superiors $ an D theory manager is usually someone with their own

problems, so try not to give them any more.

Criti#isms

Today the theories are seldom used. They are thought to e#press e#treme

positions that are not realistic. Most employees fall somewhere in between

these e#tremes and the theories are of little help in everyday human resource

management decisions. However Theory D and Theory E are still important

terms in the field of management and motivation. Recent studies have

/uestioned the rigidity of the model, but McCregors D$E Theory remains a

guiding principle of positive approaches to management, to organi!ational

development, and to improving organi!ational culture.

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HUMAN RESOURCE MANA2EMENT IN @ANIN2:

What is a @an9?

The word bankis derived from the talianbanca,which is derived from

Cerman language and means bench. The terms bankrupt and "broke" are

similarly derived from banca rotta, which refers to an out of business bank,

having its bench physically broken. Money lenders in +orthern taly

originally did business in open areas, or big open rooms, with each lender

working from his own bench or table.

The essential function of a -an9is to provide services related to the storing

of depositsand the e#tending of credit. The evolution of banking dates back

to the earliest writing, and continues in the present where a bank is a

financial institution that provides banking and other financial services.

(urrently the term bankis generally understood as an institution that holds a

banking license. Banking licenses are granted by financial supervision

authorities and provide rights to conduct the most fundamental banking

services such as accepting deposits and making loans. There are also

financial institutions that provide certain banking services without meeting

the legal definition of a bank, a so called non$bank. Banks are a subset of the

financial servicesindustry.

Human resource management 7HRM8 has long been overlooked in the

corporate sector in the country where a small section, comprising mostly the

multi$national companies was practicing the same.

*:
http://en.wikipedia.org/wiki/Italian_languagehttp://en.wikipedia.org/wiki/German_languagehttp://en.wikipedia.org/wiki/Benchhttp://en.wikipedia.org/wiki/Bankruptcyhttp://en.wikipedia.org/wiki/Depositshttp://en.wikipedia.org/wiki/Credithttp://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Banking_licensehttp://en.wikipedia.org/wiki/Financial_supervisionhttp://en.wikipedia.org/wiki/Deposithttp://en.wikipedia.org/wiki/Loanhttp://en.wikipedia.org/wiki/Non-bankhttp://en.wikipedia.org/wiki/Financial_serviceshttp://en.wikipedia.org/wiki/Italian_languagehttp://en.wikipedia.org/wiki/German_languagehttp://en.wikipedia.org/wiki/Benchhttp://en.wikipedia.org/wiki/Bankruptcyhttp://en.wikipedia.org/wiki/Depositshttp://en.wikipedia.org/wiki/Credithttp://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Banking_licensehttp://en.wikipedia.org/wiki/Financial_supervisionhttp://en.wikipedia.org/wiki/Deposithttp://en.wikipedia.org/wiki/Loanhttp://en.wikipedia.org/wiki/Non-bankhttp://en.wikipedia.org/wiki/Financial_services


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>ith the growing reali!ation of proper HRM in the corporate sector, it has

grown into an important activity. +ow the head of HRM is an important

member of the senior teams of any thriving business.

)lthough the idea is new for many local businesses where entrepreneurs are

at the beginning of the learning curve yet in reality the theme is getting

support from the organi!ed entrepreneurs.

The banking sector has grown from a few institutions primarily involved indeposit acceptance and trade finance into a comple# multi player markets

where large number of commercial banks, financial institutions and

speciali!ed banks are operating with various products and activities.

The banking has become a comple# activity within the financial market

linked directly and indirectly with an over$all national growth and its impact

as an integral part of regional segment of a global banking environment.

)lmost every bank and financial institution is involved in various functions

in a days job and thus re/uires a highly effective team and appropriate

manpower to run the show. (orporate goals are translated into viable

realities and profits only with human element that play their due role in

achieving the desired results.

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Thus even the high automation would re/uire proper man behind the

machine to make things happen. This idea has been reali!ed by top

management in progressive banks

ith liberali!ation of activities within the banking sector, for e#ample, more

emphasis on consumer and house finance and personal loans, etc. banking

has turned itself into a more market$based business where banks have

e#panded 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.

4or 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, e/uipment and appliances.

2ersonnel departments were primarily engaged in approval of leaves,

handling of staff loans, issuance of show cause, conducting disciplinary

en/uiries and termination from service.

Recruitment was a routine function and was done in a mechanical way to

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hire people with specific educational background irrespective of their real

value to the institution.

0uccess stories of large banking companies have been evident of the fact

that HRM is /uite different from management of physical assets. Human

brain has its own peculiar chemistry.

ts strong sensory and decision$making capacity has to be greatly

emphasi!ed by the employers. The work force constituting all levels of

employees are constantly thinking in many dimensions.

@n 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. ) few of the current challenges faced by the

banking industry in terms of human resource management may be the

following-

*


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CHABBEN2ES 5ACED @ THE @ANIN2 INDUSTR IN TERMS

O5 HUMAN RESOURCE MANA2EMENT-

7%8. Effe#tie 3or9 for#e:

) time$consuming and hectic job is to hunt the right talent. ts just sitting by

the river and waiting for the right fish to catch. Higher the professional value

of the vacancy, tougher is the search.

dentifying the right stuff followed by negotiation is the element which

makes the job tough for the employer. Banks are keenly interested to fill up

two types of breads of professionals.

@nes who are outstanding professionals with high job hopping attitude $

these are those who come in $ work for some time and then leave for better

prospects. @thers are those who are keenly picked$up, trained and are some

how retained to be developed as future management within the bank.

Management trainees are a growing popular phenomenon where freshly

/ualified business graduates are engaged by banks and a certain percentage

of these well e/uipped professionals stay back within the organi!ation to

grow into the footsteps of senior managers.

Banking jobs being apparently lucrative for many, attract a large number of

candidates against advertised vacancies in media creating a large data base

management problem. This has been facilitated by specialised hiring


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agencies who may take up the job of hiring in case of large number of

vacancies.

7*8. Right 'eo')e:

The most difficult agenda of HRM across the banking sector is to retain the

right people. 0udden growth of retail banking and other services has put

pressure on HR mangers in banks to engage more professionals within

shorter span of time thereby attracting manpower in other banks on attractive

packages has made the job market very competing.

) bank in a normal course invests time and money to hire and train the

appropriate work force for its own operations. This ready$made force is

often identified and subse/uently picked$up on better terms by others.

78. Com'ensation:

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. )n increment of Rs1;;$6;; per

annum is no more a source of attraction for a professional anymore. ) basic

pay with traditional formulas of linkage with medical and other facilities has

no soothing effect today.


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) 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.

) waiting period of $ years in each cadre haunts the incumbents who

strongly believe in immediate compensation. There are e#amples to this.

Thanks to the car financing modalities car is no more a fantasy item any

more.

) freshly hired professional re/uires a brand new car or car loan on

resuming office /uite contrary to his previous breed of bankers who would

wait for the job seniority to /ualify for a car loan.

78. o- satisfa#tion:

&verybody in the bank wants to work in the preferential department,

preferential location, city of his own choice and boss of his liking. )n

administrative deviation from any of these results in lowered job

satisfaction.

)lthough hiring is normally based on regional re/uirement matching the

area of activity with that of employees nativity yet other elements like

appointment in the department of choice and preference makes the job of

HR manager /uite challenging.

>hat the HR manger cannot afford is the dissatisfied employee who not

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only disrupts the smooth working himself but also spreads the negativity to

others by his de$motivated attitude.

718. Mora)e -oosting:

>hat has long been overlooked is the morale boosting of the employees by

the organi!ations. Human beings even if satisfied of material well being

need to be appraised and encouraged constantly.

0mart banks have reali!ed this need and have taken steps to keep their workforce 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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AN ETRACT 5ROM A BECTURE OR2ANIED @ THE

ACADEM O5 @ANIN2 AND 5INANCE

5o))o3ing is an e1tra#t from a )e#ture gien -% Mi)os Tu#a9oi# 3ho is

the Hea, of the /ersonne) an, Training Diision at the H%att Regen#%

Hote) in @e)gra,e" This )e#ture 3as he), in N@S an, it 3as organi4e, -%

the A#a,em% of @an9ing an, 5inan#e"

Milos Tucakovic, the Head of the 2ersonnel and Training Aivision at the

Hyatt Regency Hotel in Belgrade, was the guest lecturer at the round table of

HR managers in the banking sector, held in +B0 and organi!ed by )cademyof Banking and 4inance. Mr. Tucakovic presented his e#perience in

managing human resources in the 1$star hotel, 1% percent owned by the

famous 2rit!ker family and : percent owned by domestic shareholders, to

HR division managers from 0erbia's commercial banks and the central bank.

)daptation of world standards to domestic conditions and local culture,

main corporate culture values and personnel /uality standards re/uired in

this prestigious hotel were only some of the issues addressed by Milos

Tucakovic in his lecture.

Human resources management, presented from the viewpoint of top$level

international hotel industry, raised some new /uestions for banking sector's

HR division managers who displayed interest in evaluating other managers'

e#periences and possibly applying them in their future work. HR Manager,Milos Tucakovic, pointed out that the specific advantage of his hotel's

forming part of a world chain of lu#ury hotels provides an opportunity for

e#changing first$rate trainers and the simple option of professional training

abroad. The management of the Hyatt Regency Belgrade Hotel tends to

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recruit its management personnel from the ranks of its own employees

whose characteristics, work, performance and professional training

demonstrate that they are ready to accept new challenges. )side 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 ac/uainted with the company and the hotel, hygiene

and general work safety standards, telephone communication skills,

provision of first$rate services, complaint resolution, selling skills.

0ince 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 re/uired and developed in

its personnel.

Main characteristics re/uired in all employees are energy, adaptability,

communicativeness, commitment to clients9accuracy in work, honesty, team

spirit, collegiality and punctuality. n addition to the foregoing, managers are

re/uired 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, organi!e work, be ac/uainted with the market and the

business environment, have the ability to solve problems and be ac/uainted

with the company procedures,I Milos Tucakovic pointed out.

The management and the owners of the Hyatt Regency Belgrade Hotelbelieve that training is a type of employee benefitG hence, in addition to

various forms of training, the hotel also offers HyattrackI, the program of

independent development of managers re/uiring the candidate to e#ercise

self$initiative.

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The high level of services and business practice for which the Hyatt chain of

hotels is recogni!able worldwide is also maintained by means of the

Mystery Cuest )uditI institution, which practically means the

unannounced visit by a phantomI 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.

t should also be noted that commendations by guests are taken into account

when evaluating employees, but with a view to providing an e/ual

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.

The 5irst Roun,ta-)e of Commer#ia) @an9s HR Managers

The newly founded )cademy of Banking and 4inanceI has organi!ed the

first in the series of planned round tables for HR managers working in the

banking industry. The meeting took place in the +B0 Jilla in Topcider on

%3 0eptember with representatives of *6 commercial banks. The HR

Managers were welcomed by Mr. >olfgang Rautenberg, 0enior )dviser in

the +B0, and )leksandara


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this field, and would also facilitate daily work for the managers taking care

of the employees in the banking and finance industry.

Mr. Rautenberg e#plained that the training to be offered to commercial

banks would primarily insist on the &nglish language as the language of

banking, on ade/uate computer literacy, communication skills and specific

banking knowledge. The topics to be focused on within banking education

would comprise basics of international banking and finance,

interdependencies between the central bank and commercial banks, relations

with international institutions and modern banking systems. n addition,

special attention would be devoted to retail, corporate and investment

banking, as well as mortgages and insurance business.

Besides satisfaction of eventually meeting their colleagues from other banks,

HR managers also e#pressed interest in e#change of e#perience, in the

manner of organi!ing human resources and in education of employees in the

banking industry. They also stressed the need to find out more about

evaluating staff performance, efforts and availabilities and about motivation

and stimulation systems in business environment. The other topics of their

concern included the most reliable headhunting criteria, i.e. choice of new

professionals for the bank, but also the most desirable ways of parting with

employees who failed to meet the e#pectations or had to be made redundant.

The need for general managers to increase their awareness of the

significance of HR operations and investments in human capital was singled

out as a vital aspect of the education.

Mr. Rautenberg also emphasi!ed the importance of training for managers,

especially with respect to managing people and organi!ations, together with

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ac/uiring international presentation skills. t is up to you to change the

image of the HR sector into what it really is L and that is much more than

just administration, as it is often mistakenly thoughtI Mr. >olfgang

Rautenberg underlined in his address to the commercial banks' HR

managers.

The Se#on, Roun,ta-)e of Commer#ia) @an9s HR Managers

The second roundtable of banking sector human resources managers,

attended by representatives of commercial banks, was held today by the

)cademy of Banking and 4inance in the +B0 Jilla in Topcider. +ebojsa

Kanicijevic, 2rofessor at the 4aculty of &conomics, gave a presentation on

(ontemporary Human Resources ManagementI, discussing the importance,

organi!ation, place and role of the human resources management function

within banks.

n the course of the discussion, the participants in the roundtable emphasi!ed

that the fundamental problem they face in their organi!ations on a daily

basis is how to retain young /ualified personnel.

n this sense, stressing the importance of training managers in contemporary

management in this field, 2rofessor Kanicijevic pointed out that a basic

precondition for an efficient human resources management in banks is to

correct the misconceptions of bank's management, underestimating the

significance of human resources, as well as to prevent the reduction of work

to a mere administering of working relations and transferring responsibility

to the organi!ational unit.

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To manage human resources means to systematically attract, use and

develop personnel with a view to reali!ing the objectives of the

organi!ation,I 2rofessor Kanicijevic pointed out in the course of the

roundtable discussion.

ARTICBE ON CASE STUD7 WEST/AC @ANIN2

COR/ORATION"

ARTICBE WRITTEN @ SANDRA ONEIBB.

)t the Kuly meeting of the Making Mentoring (onnections +etwork, a casestudy of the pilot mentoring program in the >estpac Banking (orporationwas presented by +iki esoglou, Human Resource Manager of >estpacs2olicy, 2rojects N Aiversity Aepartment.

>estpacs mentoring was born out of a need, e#pressed at focus groups ofmanagers and e#ecutive managers, to e#amine career progression and toretain high potential people resources 7particularly for female staff8 withinthe company.

There was an overwhelming response to circulation of a mentoring bookletand invitation, both from people wanting to be mentors and also fromhopeful mentorees. The limited, trial nature of the pilot meant that some

people had to be turned away, but they were given assurances they would beconsidered for involvement in such a program when it goes company$wide.The pilot included %6 mentors 7%* males, 3 females8 and % mentorees 73males, 6 females8.

Bio$data sheets were issued and participants took part in mentoring skillsworkshops. These workshops were augmented, two weeks later, by a "get

ac/uainted" breakfast.

>estpacs program was feedback$intensive. The breakfast, and also a mid$point follow$up workshop with both mentors and mentorees, providedopportunities for checking reactions and progress.

*


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@n$going verbal and written guidance was offered by the project managerand coordinator. &very effort was made to stay in telephone contact with all

participants, and their comments and input acted upon. Three sets ofevaluation /uestionnaires 7at si# weeks, mid$point and project conclusion8were also used.

>estpac encountered some unwillingness on the part of some mentors toattend training. Their attitude seemed to be, " already have communicationskills $ thats why m a mentor."

Many satisfying outcomes of the pilot program have been observed.)lthough the >estpac culture generally e#hibits little gender bias, it wasagreed that the program helped improve the visibility of women in this

particular workplace.

nitial career progression indications are positive with a rise noted in thenumber of internal job applications by participants, and this will need to betracked over time.

Mentoring relationships which cross functional areas have assisted inbreaking down barriers.


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ROBE O5 @ANS

The key performance numbers that retail bank management rely on to run

their franchise effectively are shifting along with wholesale changes in

technology, delivery channel choices, sales strategy, segmentation, and

management practices.

Managing branch effectiveness has been an elusive target for many banks

due to changing objectives, shifting resources, and varying tools that

individual bank managers use to react to the marketplace. The traditional

measures of performance that branch management has relied upon in the

past are becoming invalid since they are indicators of an obsolete

environment. n cases where solid management information is not

available, banks manage primarily by e#perience, based on previous

practices and e#isting rules.

The important issues taken from this discussion are that retail management

is searching for some solid ground in making management decisions, and

that they do not necessarily trust their own numbers.

n recent years, shifts such as the development of alternative delivery

channels, customer segmentation and the resulting targeted marketing

campaigns, a younger more electronic$minded customer base, and the

adoption of end$to$end processing in new business to simplify sales

transactions have influenced retail management. 2rojections showed that

these factors would lessen the reliance on the traditional branch system to

support and deliver retail performance. The thought was that by deflecting


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high$value customers to private bankers and low$value service customers

to contact centers, banks would gain control of the most profitable

customers. nterestingly enough, a recent Callup 2oll 7)pril % to %3,

*;;8 finds that 6 percent of )mericans still visited their branch bank atleast once a month on average over the past year. Bank changes to

products, service offerings, and their approach to customer segments in

general, have yet to significantly impact 7deflect8 customer behaviors. The

primary responsibility of retail bank managers is to meet the service

e#pectations of customers.

>hile each banks key management numbers are uni/ue to its conditions,

an e#amination of what is changing in the industry to gain competitive

perspective is valuable. The Robert &. +olan (ompany conducts an annual

&fficiency Ratio Benchmarking 0tudy. The results provide an e#cellent

starting point in establishing directional shifts. The study e#amines

differences between high$performing banks and average banks by each line

of business. The *;; study includes data from 3 banks, thrifts and credit

unions with assets between O % and O1 billion.

The retail branch &fficiency Ratio is currently *5.% percent for the top$tier

performers and 5.1 percent for the average of all 3 participants. The

efficiency ratio is a common banking ratio which measures the cost to

generate a dollar of revenue. t is important to understand the essential

factors that make a difference and try to put them into perspective. The

differential is significant between the top performers and the average

banks, but we must comment that a high efficiency ratio by itself for any

given bank should not be viewed as an indictment of the retail management

of that bank. t is often, simply, a function of the work processes, systems,

policies, incentives, and marketing programs that the bank has chosen to

employ. >e will e#amine the drivers beneath the key numbers to shed

some light on what the new numbers mean.

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TECHNOBO2

Banks are taking a variety of approaches in implementing technology to

make improvements in retail delivery. The methods differ, depending on

the bank managements mindset toward the purpose of the software and its

valued place in the new business or service delivery processes.

0ome 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. n those cases, the technology decision

starts with a traditional approach to define business re/uirements leading to

software selection and then implementation. Technology vendors prefer toinstall their software in the easiest and most operationally effective way

possible. Jendors 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 re/uired. 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. @ften in

isolation, the "owners" of an element of the process make the system

choices for the pieces of technology they re/uire. 4or e#ample, 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 (RM are often the purview ofmarketing. ndividual system owners most often do not want to complicate

the decision to ac/uire and install "their system" by including total

integration of all data re/uirements in the process resulting in largely

disconnected technological environments.

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4urther, technology is not often applied to simple processes that could

reduce errors, cost and time. Retail banks sell 31 to 6; percent of their new

products to e#isting customers. eeping this in full view, the new business

process should allow the e#isting core systems to populate the appropriatecustomer data whenever a customer opens a new product or service.

The trend in technology is straight$through processing or electronic

integration of all the re/uired data elements and support systems.

ndependent surveys conducted by the Robert &. +olan (ompany reveal

that many banks have this objectiveG 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

/uality of data elements. This advantage will certainly impact the amount

of work that a (0R 7(ustomer 0ervice Representative8 is able to complete

on a comparative basis. )n interesting discovery from the most recent

+olan &fficiency Ratio Benchmarking 0tudy 7analysis completed july

*;;8 reveals that there is no correlation between a particular software

system and higher retail performance. The study e#amined top$tier

performers by line of business, asset si!e, and type of organi!ation, withoutnoting 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.

TEBBER E55ECTIFENESS

ndustry data is best used as directional information, not as a true measure

of what individual banks need to achieve to reali!e high performance.Teller effectiveness is an area where banks have gone through cycles over

the past *; years. n the %:6;s, 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

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to help measure and track the balancing process, including triple counting

the cash back to customers, and a practice called "backing" deposit slips

and9or withdrawal slips. Backing referred to writing the e#act currencies

transferred on the back of the slip to potentially simplify the balancingprocess later in the day 7for e#ample, ten *;s, five %;s, two 1s and five s P

O*31. ;;8. n 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 e#amined the value of each element of

transaction processing and found that the work e#pended in triple counting

and backing added *; percent or more to the transaction time. They

conclude that this work is not cost beneficial. The following statistics from

the *;; +olan &fficiency Ratio Benchmarking 0tudy show the range of

teller performance from high$performing banks to average performers.

The data demonstrates that high$performing banks handle % percent more

transactions per month than average banks. The relative cost pertransaction is 1 percent higher in the average banks than the high$

performing banks. )lthough banks need these statistics to look at teller

performance, a directional view is re/uired. &ach bank places differing

process and security time burdens on the teller position. Transaction

effectiveness is a significant factor, but other conditions can directly

influence transaction performance.

Teller performance variables can include- the impact on trainingG the teller

turnover rateG the actual teller performanceG the opportunity to perform at a

high rate related to staffing and schedulingG the use of part$time tellers and

teller pools that can support multiple branches due to illnesses and

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vacationsG the customer base being servicedG communicationsG and, the

sales referral policies and re/uirements.

>ide variances e#ist in the time and effort banks put into teller training.

0ome banks provide no formal training but have tellers work with a "teller

trainer" in the branch to learn the policies, procedures and systems. n these

cases, the trainer will influence the procedure with their individual biases

and not necessarily the banks standard practices. 0ome banks institute a

three$week formal training process where tellers learn about the banks

commitment to customers and how it supports the banks 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 surfaceG 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. &ffective training can cut errors

and help to ensure that the speed of processing is elevated through a

confident and competent staff.

The annuali!ed teller turnover rate is typically one of the highest areas in a

bank, ranging from the mid teens in some banks to over %;; percent in

others. The national average is to 1 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.

+ot many banks are e/uipped to measure the actual teller performance or

even relative performance within a branch or from branch to branch. @ne

of the reasons is that teller opportunities to perform are not e/ual. ) drive$

up teller will usually handle more transactions per hour due to handling

:


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two customers at a time and a limit on transaction types. >ithin the branch,

the teller at the head of the /ueue will service every customer in slow

periods, where a teller at either end of the teller line will not have as many

opportunities. To analy!e real teller performance, the bank would needsophisticated 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 utili!ation, 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 (0R positions effectively. all three have the

modeling capabilities and report generation necessary to be effective with a

diverse set of branch locations. CMT, Aemos, and ometrics all have the

re/uired /ueuing models and the fle#ibility 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 fle#ibility 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. 0ome banks tailor standards to location$type

such as urban, rural, shopping mall, university, etc. Aifferences in work are

attributable to a varying mi# of transaction types due to customer base,

possibly differing cashing limits for tellers due to e#perience or branch

characteristics, physical location of bank checks and encoding e/uipment,

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 have lower real

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performance due to more tellers who are in a learning curve. The learning

curve for tellers is typically three monthsG and with a bank turnover rate of

1 percent, that can lead to lower performance in selected branches. Banks

can adjust the staffing model for effective service in locations with highturnover until the time that problem is resolved. 0taff 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. n 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. @ften a branch

re/uires the e/uivalent of between %.1 and *.1 tellers per hour in remote

locations. Management may decide to utili!e 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 penali!e them or it will force

even higher turnover.

n the past si# years, retail banking has e#perienced 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 e#pected volume

of two closed referrals per day. ncentive 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 +olan &fficiency Ratio Benchmarking

0tudy show that top$performing banks branch personnel are processing %

1%


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percent more transactions per month than the average banks and are

supporting : percent more deposit accounts. The factors that prevent

banks from performing at the higher level relate to process efficiency,

policy, deployment of staff through scheduling and staffing, and theconnectivity of software.


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actual sales and account opening. ) factor influencing this difference in

performance is that average performing bank (0Rs spend more time

opening individual accounts and therefore open fewer accounts per month

than the time allows.

COM/ARISON @ETWEEN HI2H7/ER5ORMIN2 @ANS AND

AFERA2E /ER5ORMERS"

When 3e e1amine the ,etai)s of high7'erforming -an9s ersus aerage

'erformers; 3e ,is#oer a,,itiona) ,etai) on 3hat ,ries -ran#h

'erforman#e" The fo))o3ing is from the $GG& No)an Effi#ien#% Ratio

@en#hmar9ing Stu,% retai) -ran#h ,ata.

High performing banks put on %1* new accounts per employee versus the

average banks %: new accounts, an increase of :.1 percent. hen we further dissect the

information, we see the new non$time deposit account balances as a

percentage of total non$time deposit balances was % percent in top$tier

banks versus *; 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 e#isting deposits better than the

average banks. >hat are the underlying factors that might support this

outcomeQ 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. n some cases, it has literally transformed the retail banks

from "order takers" to "business development" engines. (0Rs have had

their offerings e#pand to include insurance, investment and select deposit

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products. t can be difficult to train (0Rs in the relative benefits of each

vehicle and often the weight of the incentive to the product drives them,

not the need.

+ot every bank has e#perienced the same success in terms of this change

translating directly to the bottom line. >hen banks e#amine the incentives

that are paid to (0Rs there are a couple of telling characteristics to look

for. Many 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 (0R could have sold the account based on its features. 0uccessful

banks establish both branch and individual sales thresholds before

incentives are earned.

) second element to consider is what the bank is strategically trying to

achieve$net new business. n 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 e#isting 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 e#isting customers. +ot 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 e#cellent market data has greatly assisted the banks who

understand where to place their sales and service emphasis.

0egmentation of the market is significant since it is not so much a measureof the actual effort as where the effort is e#tended. Today over ;; (RM

models are on the market, and the tools are more affordable with greater

applications. Aeployment is as much a part of the success of the tools as it

is with any technology. @ften the marketing teams concentrate on a

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specific use and not on developing market intelligence. 4or e#ample, 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 specificproduct offering which may not convert to an interest in other product

offerings. )pplying science and analytics to the data suggests that the most

pertinent information will lead to selling new products to e#isting

customers.

This analysis also applies to the possible loss of customers. n 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 e#isting

work processes. @ften this happens with H&hen the

loan is approved, there is a separate input form or screen for document

preparation. n many cases, the (0R needs to prepare a separate document

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to show that they have properly completed an assessment of the customers

full investment, loan and deposit account needs with an entirely separate

input form and screen. )fter the loan is approved, a separate incentive form

or screen may need to be completed. hat makes the difference between the top$

performing retail banks and the average performers is the way they design

and deploy their resources to achieve sales and service goals for their

customers. The numbers tell a story over time. The comparative gap in

efficiency ratio between the top performers, *5.% percent, and the averagebank, 5.1 percent, is significant at *;. percent. nterestingly, of the *;.

percent gap, the personnel cost gap is %; percent and the other operating

e#penses is %;. percent.

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The ways people, processes and technology are designed, integrated and

deployed make the difference. The analysis conducted in the annual +olan

study of the top$performing banks year after year shows that improvements

are ongoing$thai is what makes a single target elusive. The key to successis to understand that policy, process, technology and deployment should be

the source of your measures and the basis for your improvement

opportunities.

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Documents

Hrm in Insurance (100 Marks Project)