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Indian Journal of Economics & Business, Vol. 16, No. 1, (2017) : 37-50

* Research Fellow, Management Department, IKGPTU, Kapurthala, E-mail: [email protected]** Associate Professor, Management Department, SBSSTC, Ferozepur, E-mail: [email protected]

EMPLOYEES’ ATTITUDE TOWARDS CHANGINGFACE OF HRM FUNCTION IN INDIAN BANKING

INDUSTRY

RAMANPREET KAUR* & RAMINDER PAL SINGH SACHDEVA**

Abstract

In the present era, dynamic advances in information and communication technologyconverged with the forces of economic liberalisation, globalisation and virtualisationhas posed a volatile macro environment for the organisations. Organisations are incontinuous strife to optimise their resource utilisation, to achieve excellence, highlevels of efficiency and competitive edge over the competitors. So the businessenvironment nowadays, calls for the reengineering the business processes and strategicpolicy making for survival of the organisations. Out of men, machinery and money,human resources are the most vital factor in growth and development of business.Hence, the research paper attempts to examine the imperativeness of sound HumanResource Management Practices in Banking Industry of India. The focus of the currentstudy is to examine into changing face of HRM function in banking industry andlook into the HR practices being followed in this industry in present. The researchpaper is focused on studying the attitude of employees towards the five major HRpractices of public and private sector banks of India. Various variables of these HRpractices are framed for the complete analysis of attitude of the employees towardsthe practices.

Keywords: Human Resource Practices, Staffing, Job and Work Environment,Compensation, Performance Appraisal, Training and Development.

INTRODUCTIONIn the present era, dynamic advances of information and communication technologyconverged with the forces of economic liberalisation, globalisation and virtualisationhas posed a volatile macro environment for the organisations. Organisations arestriving to achieve sustainable excellence to sustain in highly volatile businessenvironment. Organisations are in continuous strife to optimise the use of theirresources to achieve excellence, high levels of efficiency and competitive edge intheir operations. This has lead to a continuous warfare among the organisation for

38 Ramanpreet Kaur & Raminder Pal Singh Sachdeva

acquisition, retention and optimum utilisation of the scarce resources. And humanresources are nevertheless most important and valuable resources in achieving theorganisational goals of excellence, efficiency and sustainability. One simple fact of21st century is that human resources- people within the organisation are one of theprimary means of creating competitive edge for the organisations. Human resourcesas the only active resources in the organisation are responsible for efficient andeffective use of money, machines, materials and technology. With the realisation ofvital role of human capital plays in the organisations, the focus of the current studyis to examine into changing face of HRM function in one of the most importantservice industry, i.e. Banking industry and to make an endeavour to find out thatwhether HR practices need a facelift in the current scenario or not.

Statement of the ProblemBanking industry viewed from personnel angle, has its own peculiarities. It is mainlylabour intensive industry and employees have got bearing on services offered.Human Resource Management function in this industry has travelled a long distancefrom basic Personnel Management to HRM function in line with organisationalstrategy. Although being the drivers of economic development of the country, HRMin banking industry should have gained better priority in its earlier days, butunfortunately it has been the most neglected part by bank managements. But,nowadays HRM function in banks is forging ahead at an exemplary pace. A majorityof banks have set up different Human Resource Management and Human ResourceDevelopment departments. Employees working in this industry have alsorepresented attitudinal changes towards HRM function. Employees empoweredwith access to the world through information and communication technology, arebecoming increasingly aware of recent trends in human resource management indifferent industries. The present study addresses the need of studying employees’attitudes towards changing face of HRM function in the Banking industry of India.

REVIEW OF LITERATUREMany researchers have investigated the role of human resource management ineffective functioning of the organisations. Sound and clear human resourcemanagement policies and practices are significant in determining behaviour andinsolence of the employees. Review of brief literature for the purpose of the studyclearly indicates the linkage between sound HRM practices and employeesatisfaction and consequently a competitive advantage in business. This is reasonnowadays that not only developed countries, but also developing countries areconsidering effective HR management as a vital component of their growthstrategies. Gratton et al. (1999) describes the essence of human resourcemanagement as “Human resource management advocates the devolution of peoplemanagement from the human resource function to line management. However theresearch shows that this is difficult to achieve in practice. What can be done toensure line managers take responsibility of implementation of HR policies and

Employees’ Attitude towards Changing Face of HRM Function in Indian Banking... 39

practices? Thornhill et al. (2000) found a potential role for HR centred strategies tobe used to change or realign the culture of an organisation. The authors suggestedthat an organisation can change its culture by recruiting the managers from outside,restructuring the organisation, downsizing the workforce, training programmes,new reward strategies and performance management to alter the employeebehaviour and reinforce the emergent one. Supangco (2001) conducted a study toestablish relationship between sophistication of HRM plans and perceivedorganisational performance; relationship between sophistication of HRM plan andthe degree to which companies undertake practices with high strategic value; therelationship between strategic human resource management practices and perceivedorganisational performance Narasaiah & Reddy (2002) reviewed some of thesignificant HRD practices in Life Insurance Corporation of India and studied someof the HRD interventions by LIC that focused on individual growth of people of theorganisation. The goal of personnel policies in the changing scenario aim at ensuringsufficient number of persons with sound insurance background and experience atdifferent levels. So employees should get equitable opportunities to move up on thebasis of their performance. Roos et al. (2004) tried to examine the change of HRfunction into HRM with a view of current strategic role. Recent work on linksbetween HRM and business performance is reviewed highlighting the conclusionthat while the links are not disputed by researchers using variety of approaches,the ability to characterise definitive casual links has proved almost impossible.The techniques and resource based approach of Intellectual Capital may providethe key to identify the links, but again the work to date has proved that it may notbe possible to clearly separate HRM from other management functions to quantifythe effects of HRM. Ashraf (2007) explained that human development envisagescrating the condition that are helpful in creating motivated and skilful humanresources dedicated to the task of producing goods and services for the goodwilland welfare of the society. Mangleswaran & Srinivasan (2011) studied the HumanResource Management Practices (HRMP) and its outcomes viz. job satisfaction andorganisational commitment in Indian public sector banks. The study revealed thateffective HRM practices contribute to job satisfaction. However for PSBs in Indiathree HRM dimensions determine employee satisfaction. Further employeesatisfaction reduces stress and increase customer satisfaction. The results of thestudy reveals that sound HRM practices lead to higher job satisfaction andorganisational commitment. Majumdar (2012) in his study on HRM practices inprivate sector banks in Bangladesh concluded that there is need ofprofessionalization of HR practices to shape and develop new directional focus toensure efficient and effective HRM practices. Bowra, Niazi et al. (2012) studied theimpact of human resources practices on perceived performance on banking sectorin Pakistan. The HR practices and employee perceived performance has shownpositive and significant relation in the study. The results were in accordance withprevious study (Baloch et al., 2010). Mathivanan (2013) stated that HRM is a growingconcept which has tremendous relevance to services sector like baking. The level ofefficiency of this input is reflected in quality services provided in by banks to its


customers. Tariq et al. (2014) explored the mediating role of employee motivationin relationship between post selection human resource management practices andperceived performance of Islamic banks in operating in Pakistan. Results ofregression analysis supported that post selection HRM practices have positiveimpact on perceived organisational performance and employee motivation.Neelkantaiah (2015) attempted to study human resource management and practicesin Indian banks and concluded that foremost challenge of HR function of India is toconvert abundant population pool into useful human resources. Training anddevelopment of human resources to meet ever changing needs of industry is anotherchallenge for banking industry. So the major challenge for banks as well as otherorganisations to develop their social architecture and intellectual capital as driverof change.

OBJECTIVES AND METHODOLOGYObjectives of the current study are-

• To examine the Human Resource Management practices followed by publicand private sector banks of India at present.

• To study the attitude of employees’ towards these HRM practices and see ifthere is any difference in the satisfaction levels of both banking sectors’employees towards HRMP.

MethodologyKeeping in light the objectives of the study, three public sector banks viz. StateBank of India, State Bank of Patiala and Punjab National Bank and three privatesector banks viz. Axis Bank, ICICI Bank and HDFC Bank were selected. A samplesize of 350 employees working in both the sectors was selected on the basis ofconvenient sampling in the north zone of Punjab state. All the respondents werecontacted personally in the banks. A structured questionnaire covering theimportant dimensions of HRM was formulated to study the satisfaction level ofemployees towards these practices. But only 318 questionnaires could be consideredvalid and complete for the purpose of analysis. All the respondents cooperated inkeeping up the essence of this exploratory research by giving appropriate responsesto all the questions in questionnaire.

Hypotheses SettingHypothesis will be tested using independent sample t-test for the acceptance andrejection at significance level of 5%.

H1: There is significant difference in Staffing Practices of Public and PrivateSector Banks.

H2: There is significant difference in Job and Work Environment of Public andPrivate Sector Banks.


H3: There is significant difference in Wages and Compensation Practices ofPublic and Private Sector Banks.

H4: There is significant difference in Performance Appraisal Practices of Publicand Private Sector Banks.

H5: There is significant difference in Training and Development followed ofPublic and Private Sector Banks.

DATA ANALYSIS

Demographic Distribution of the RespondentsThe below subsections will present the demographic distribution of the respondents.The respondents have been segregated according to the type of employers i.e. publicor private sector banks, gender of the respondents, age of the respondents,qualification of the respondents, organizational experience of the respondents andtheir designation at the workplace.

Bank Wise Break Up of the Respondents

Figure 1: Bank Wise Break Up of the Respondents

The pie chart shows that nearly equal distribution of the employees fromboth public and private banks in Punjab, though the percentage of employees fromprivate sector banks (50.94%) were marginally higher than the public sector banks(49.06%).


Gender Wise Break Up of the Respondents

Figure 2: Gender Wise Break Up of the Respondents

The pie chart shows that participation of both males and females are high inthe banking sector of Punjab. However the share of the male employees (53.77%)among the respondents was nearly 7% higher than the share of the female employees(46.23%) among the respondents.

Designation Wise Break Up of the Respondents

Figure 3: Designation Wise Break Up of the Respondents


The pie diagram gives the demographic wise segregation of the respondentsfrom the public and the private banks. From the pie diagram it is evident that thelargest share of the respondents were working at the officer level (53.14%), followedby the managerial cadre (33.33%), while 13.52% of the respondents were workingas clerk or junior positions at their respective organizations.

Table 1.1Variables for Human Resource Practices in the Public and Private Banks

Coding Dimensions

v1 Sufficient staff is available in the bankv2 Bank follows a standard procedure of recruitment

v3 Objectivity of methods of selectionv4 Transparent and fair selection

v5 Individual merit, skills and knowledge is given due considerationv6 Bank follows a standard procedure of transfers

v7 Getting transferred to your required place is easy and simplev8 Training programmes serve both individual and organizational objectives

v9 Training system & staff is suitable and adequate as per the need of trainingv10 Training is imparted in an organised manner

v11 Training is conducted every yearv12 Training needs are identified through performance appraisal mechanism

v13 You are clear about the roles and responsibilities of your job

v14 Supervision and communication channels are short and simplev15 Supervisors behaviour is proper and encouraging with his subordinates

v16 Your job is reasonably secure as long you are good at the jobv17 Present job is as per your ability, qualification and experience

v18 Leave policy of your bank is clear and simple to understandv19 Leave policy is as per industry guidelines (specifically in the case of sickness

leave or maternity leave)

v20 Bank follows a standard salary structure including HRA/ DAv21 Same salary for same job level

v22 Salary is revised as per industry guidelinesv23 Non- Financial incentives are provided by the bank

v24 Mode and time of payment of salary is rightv25 Performance appraisal methods are standard and effective

v26 360 degree method of performance appraisal is adopted by your bankv27 Self appraisal by employee is counted in final appraisal

v28 Feedback is provided to the employees after their performance appraisalv29 Bank conducts HR audit to check the effectiveness of HR policies, practices and

procedures in personnel management

contd. table 1.1


v30 Promotion policy is transparentv31 Bank adopts seniority based promotion methods rather than merit based

promotions

v32 Training needs are assessed before imparting trainingv33 Training programme content is of relevance to your job

v34 After training- performance of employees is measuredv35 Training provided is useful for career planning and development

v36 There are formal training evaluations for assessing the effectiveness of training

Independent Samples’ T Test: Comparison of Human Resource Practicesin the Public and Private Banks in PunjabThis section presents the results for the independent samples’ T test; those wereconducted to compare the human resources practices in the public and private banksin Punjab.

Table 1.2Comparison of Staffing Practices between the Public and Private Banks:

Independent Samples Test

t-test for Equality of Means

T df Sig. Mean Std. Error(2- Difference Difference

tailed)

v1 Equal variances assumed 20.794 316 .000 1.876 .090Equal variances not assumed 20.795 315.620 .000 1.876 .090








Coding Dimensions

contd. table 1.1


v9 Equal variances assumed 23.965 316 .000 2.107 .088

Equal variances not assumed 23.954 314.773 .000 2.107 .088v10 Equal variances assumed 22.554 316 .000 2.047 .091


Equal variances not assumed 23.787 315.855 .000 2.197 .092V12 Equal variances assumed 23.668 316 .000 2.152 .091

Equal variances not assumed 23.694 315.878 .000 2.152 .091

Independent samples T tests were conducted in order to compare the staffingpractices between the public and the private banks and the results are produced inthe Table 1.2 The results indicated statistically significant results for each of the Ttests, since the Sig. value was .000, which was less than the level of significance (�)for this study which was set .05. The result signifies that the null hypothesis had to



tailed)

Table 1.3Comparison of Job & Work Environment between the Public and Private Banks:


` t-test for Equality of Means


tailed)










be rejected i.e. the hypothesis that there was no difference among the staffingpractices between the public and the private banks in Punjab had to be rejectedand the alternate hypothesis i.e. there was significant difference among the staffingpractices between the public and the private banks in Punjab had to be accepted.

Independent samples T tests were conducted in order to compare the job &work environment between the public and the private banks and the results areproduced in the Table 1.3 The results indicated statistically significant results foreach of the T tests, since the Sig. value was .000, which was less than the level ofsignificance (á) for this study which was set .05. The result signifies that the nullhypothesis had to be rejected i.e. the hypothesis that there was no difference amongthe job & work environment between the public and the private banks in Punjabhad to be rejected and the alternate hypothesis i.e. there was significant differenceamong the job & work environment between the public and the private banks inPunjab had to be accepted.

Table 1.4Comparison of Compensation between the Public and Private Banks:




tailed)







Independent samples T tests were conducted in order to compare thecompensation between the public and the private banks and the results are producedin the Table 1.4 The results indicated statistically significant results for each of theT tests, since the Sig. value was .000, which was less than the level of significance(á) for this study which was set .05. The result signifies that the null hypothesishad to be rejected i.e. the hypothesis that there was no difference among thecompensation between the public and the private banks in Punjab had to be rejectedand the alternate hypothesis i.e. there was significant difference among thecompensation between the public and the private banks in Punjab had to be accepted.


Table 1.5Comparison of Appraisal & Promotion between the Public and Private Banks:




tailed)









Independent samples T tests were conducted in order to compare the appraisal &promotion between the public and the private banks and the results are produced inthe Table 1.4 The results indicated statistically significant results for each of the Ttests, since the Sig. value was .000, which was less than the level of significance (á)for this study which was set .05. The result signifies that the null hypothesis had tobe rejected i.e. the hypothesis that there was no difference among the appraisal &promotion between the public and the private banks in Punjab had to be rejected andthe alternate hypothesis i.e. there was significant difference among the appraisal &promotion between the public and the private banks in Punjab had to be accepted.

Independent samples T tests were conducted in order to compare the learningand development practices between the public and the private banks and the resultsare produced in the Table 1.5 The results indicated statistically significant resultsfor each of the T tests, since the Sig. value was .000, which was less than the levelof significance (á) for this study which was set .05. The result signifies that the nullhypothesis had to be rejected i.e. the hypothesis that there was no difference amongthe learning and development practices between the public and the private banksin Punjab had to be rejected and the alternate hypothesis i.e. there was significantdifference among the learning and development practices between the public andthe private banks in Punjab had to be accepted.


Table 1.6Comparison of Training and Development Practices between the Public and

Private Banks: Independent Samples Test



tailed)







FINDINGS AND SUGGESTIONSThis paper analyzed the human resource practices and employees’ attitude towardsthem in public and private banks in Punjab and came with the following findings:

1. The Human Resource Practices for the public and private banks comprised ofthe following factors:

• Staffing

• Compensation

• Job and Work Environment

• Appraisal and Promotion

• Learning and Development

2. The Public Banks in Punjab seemed to have a superior level of Human ResourcePractices, since the study suggested employees of the public banks had a morefavourable perception towards the staffing practices along with compensation,job and work environment, training and development and appraisal andpromotion, than their counterparts in the private banks. Hence the privatesector banks need a complete policy facelift for the HRM practices being followed.Dissatisfaction among their employee can be hampering in delivering excellentservice to its customers consequently it can affect the growth and developmentof the business.

3. Focus group interviews and the in-depth interviews with the employees of thepublic and the private banks in Punjab revealed public banks in Punjab had a


well etched plan regarding the staffing process of their banks while the privatebanks’ employees’ often complained about understaffing. Public banks had adefinite plan for recruitment i.e. they first identify the roles which need to befilled up with the right skilled personnel and then the recruitment process isinitiated while the employees of the private banks observed that the recruitmentprocess in their banks was often “haphazard”. Most of the employees from theprivate banks said that the banks often used to hire without mapping thecompetency of the potential recruitments with the target roles and thus, oftenthe main purpose of recruitment was not being served.

4. The employees of the public banks were happier in their organizations and themain reason was the job security. The employees of the public banks said thatthe fact that they work for nationalized banks gave them a feel of job securityand since there was no insecurity of losing job the environment was relaxed.However, the employees of the private banks said that they were alwaysapprehensive about job cuts since job cuts were rampant in the private sectorbanks. They said that the constant sense of fear of losing jobs made the workingenvironment tense and they hardly used to enjoy the job and work environmentin the banks.

5. In-depth interviews with the employees of both public and private banks revealedthe difference in HR practices related to compensation structure of both thebanks. The employees of the public banks had nothing to complain about thesalary since the salary of the employees of public banks had a definite structureand thus, employees at the same level were assured of the same salary structure.Apart from this the employees were also assured of in-time salary and neverthere was any delay in salary disbursements for the employees in the publicbanks. However, the employees in the private banks expressed their resentmentsabout the compensation structure in their banks. They were of opinion thattheir salary was not compliant to the industry guidelines and also, there wasdiscrimination of salary at the same level.

6. The employees of the public banks observed that the appraisal of the publicbanks were unbiased and fair. The appraisal policies of the public banks, asthey said was not meant to favour any particular employee and most of thetimes the promotions used to happen according to the seniority, provided thecandidates had a proven track record of performance. However, the employeesof the private banks complained about favouritism in the appraisal and thepromotion policies. They observed that the appraisal process was not transparentand fair all the time and a lot of times the undeserving candidates used to getpromotion, owing to their personal camaraderie with the managers andsuperiors.

7. The employees of the public banks commented that their employers putsubstantial emphasis on the learning and development of their employees. Theemployees of the public banks revealed that once the training needs of an


employee was identified, the employee used to be put under the training for acertain period of time under the supervision of a mentor and once the trainingwas over, the performance of the employee was measured in order to measurethe effectiveness of the training process. However, the employees of the privatebanks said that though they were put under occasional training programmesbut they were much more generic in nature and not customized according tothe training needs of the employees.

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