PSU banks convene HR pow-wow to halt attrition

In a rare show of forward planning, the government met public sector bankers to grapple with a challenge that will hit the banking system a few years from now, that is how to replace the 75,000 employees who are set to retire by 2015, and ensure a leadership vacuum does not suffocate growth, reports Gopika Gopakumar of CNBC-TV18.

It was a busy weekend for senior public sector bankers, who met at a first-ever HR conference held under an initiative of the finance ministry with the agenda: How to replace 75,000 employees who are set to retire by 2015? RBI deputy governor KC Chakrabarty says it's time for lateral hiring of skilled employees.

KC Chakrabarty, deputy governor, RBI, says that why should you recruit from PSU banks? Globally people move to banking professions from other professions. How many from MC Kinsey joined bank? How many from accounting have joined bank? There is a need to go for lateral recruitment. 

Senior bankers called for better compensation package to retain young employees. In response to this, Chakrabarty argued that cost per employee of PSU banks is higher than that of private sector banks.

And as per IBA data, profit per employee in PSU banks is much lower. So, he says the absence of cost advantage, and the problem of lower productivity calls for an urgent HR transformation in PSU banks. However, bankers feel variable pay structure should still be introduced.

Alok Mishra, CMD, Bank of India, said a report will be submitted on profit shared with good workers as it will be motivating. The profit should be shared in the form of amount, monetary, non-monetary and ESoPs.

In the meeting, the mandatory rural service rule also came under review. Currently, bankers have to complete two years of rural posting to be eligible for a promotion but the finance ministry wants this mandatory for bankers at the time of joining.

Prabhakar, CMD, Andhra Bank, says that we should give first posting to rural areas so that they will work for two-three years because that is where business is going to be in coming years. Priorities of government, priorities of nation require people to work in rural areas. In this context suggestion are welcome.

But there was a more immediate problem that banks need to work on.

The finance ministry is pushing PSU banks to fast-track all promotions and transfers, and have them complete by the June 30 and you may call this micro-management, but the ministry feels that an important solution to stopping attrition in PSU banks is a streamlining of the process, so transfers and promotions must happen regularly and on time.

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