Banking Central | How healthy is the work culture in our banks?

The work pressure condition is perhaps pathetic in the banking sphere where the competition gets hotter by the day.

The tragic fate of Anna Sebastian Perayil, the 26-year-old Ernst & Young staffer who died in Pune last week, raises a pertinent question before the world's fastest developing economy: Is the workforce incompetent for the rapidly evolving business or the business is impervious to the limits of the workforce?  There's no denying that the simmering competition in various spheres of business is pushing the workers too hard.

The labour ministry has initiated an investigation into Anna's death after extreme work pressure was cited by her colleagues as the trigger behind her heart attack. Junior labour minister Shobha Karandlaje said the government is committed to ensuring justice. But justice cannot be served unless the system recalibrates itself to avoid any more Anna to die an untimely death.

The work pressure condition is perhaps pathetic in the banking sphere where the competition gets hotter by the day. The red line separating workaholism and work pressure is often blurred in the corporate mosaic and both sides face the similar stress conditions at the workplace. Although very thin in count, the workaholics waddle through the challenge, but the less fortunate and the biggest chunk of the workers on the other side of the border fail to wriggle out of it. Anna's loss hits the bell lest it's too late to act.

The incident cannot be seen in isolation. There's no dearth of instances where bank employee unions have voiced against toxic work culture in the industry. Anna's death prompted a prominent employee union to issue a press statement last week, seeking action from the management against workplace harassment and toxic work culture in banks.

The union stressed that the work environment has become more toxic with work pressure mounting because of a crunch in manpower resource. It also voiced against unfair labour practices the management follows by handing out transfers even in violation of policies. The statement also highlighted the punitive and vindictive actions, including suspensions and dismissals that trade union functionaries suffer and unfair business practices that force the employees to push-sell market-linked insurance products, mutual funds, and so on.

The union questioned rather justifiably that if a bank's core activity is accepting deposits and giving loans, then why the employees are being forced to sell insurance and mutual fund products under stiff targets. This column had highlighted earlier how toxic work culture in banks was being fostered by unfair business targets slapped on the staff by the top management. These targets are often set to  sell insurance and mutual fund products of subsidiary companies or third parties. Those who can meet the targets are rewarded and the rest are overlooked.

The non-performers, as those who fail to meet the set goals are referred to, get a raw treatment, beyond doubt. The result is inevitable churn.

High attrition

Thanks to the excessive work pressure, banks are battling with high attrition rate. All major private sector banks saw a spurt in exodus across FY23. The trend eased a bit in the following year from 31-51 percent in FY23 to 25-45 percent in FY24, according to an Economic Times report.

In FY24, the attrition rate in HDFC Bank eased to 26.9 percent from 34.2 percent in FY23, while in ICICI Bank it fell from 30.9 percent to 24.5 percent and in Kotak Mahindra Bank, it was down from 45.9 percent to 39.6 percent. Yet, the rate of churn stayed pretty high, compared to the standard level of 18-20 percent.

One need to understand that high attrition rate is only a symptom of deep-seeded issues within the banking system. Loss of manpower becomes inevitable when the institutions drift from their core business of deposits and lending and turn into a financial services supermarket.

Abusive language, name calling

As pressure trickles down from the top to the bottom, and when the desired results are left unmet, violation of human dignity becomes inescapable, for obvious reasons. We have seen a host of instances in the recent past where abusive behaviours from seniors have made headlines and flooded social media.

Unlike the old-era bankers, for whom the first job in their career often meant their lifelong workplace, the younger generation has more options to switch careers and venture into entrepreneurship. They don’t need to spend the whole career in their first company. The availability of options paves the way for attrition at lower and mid-level in banks.

Banking is a critical industry in the economy, often called as its backbone. A healthy work culture in the industry is critical for its growth and development. The plight of the young aspirant girl in Pune provokes, evokes and invokes the dire need for the banking industry to relook its strategies.

The bank managements need to get the cues before it is too late. Instead of waiting for a crisis to unfold, they should proactively work towards resolving issues concerning work pressure and toxic work culture to keep its biggest asset, the human capital, in perfect order.

Banking Central is a weekly column that keeps a close watch on and connects the dots regarding the sector's most important events for readers.