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I do not think anyone in Sri Lanka has not compared Human Resource Management Practices in Sri Lankan Public/Privet Sector banks. The key areas must be considered staffing, training, compensation, performance appraisal, and employee relations. Sri Lankan Banks show to adopt a more rational approach than their counterparts.
Globalization, privatization (Public Banks), free trade, and liberalization are increasing the competition to the business organization. A key challenge confronting organizations is to continue to achieve sustained competitive advantage in the short term and also to prepare for long-term success. The primary source of competitive edge, in addition to access to finance or capital, rests with the organization, and with the people. People are the most important and valuable resources of any organization. Dynamic people can build a dynamic and growth-oriented organization. Effective employees can contribute to the effectiveness of the organization. Competent and motivated people can make things happen and enable an organization to achieve its goals. In this respect, the organization should continuously ensure that the dynamism, effectiveness, competency, and motivation of its people should remain at a high level.
Why HR important for Banking Sector?
Human Resources are more important in service organizations than in the goods-producing industry, as their cost of labour is relatively a high proportion of the total cost of production. Moreover, employees on the front line in the service sector are in contact with the customer, and customer satisfaction depends upon employee performance.
Banks, in the service industry, delivers their service across the counter to the ultimate customer. The activities of the banking industry are all about “relationships”. Hence, the banking industry has to provide better services with a smile to the customers in order to cultivate and maintain a long-lasting relationship with their customers. Notwithstanding the level of technology, banking is primarily a labor-intensive service sector. Hence it will not be possible for the banks to sustain effectiveness unless human resource management is given prime importance because the technology is only an aid to human effort and not a substitution thereof. If the technology is equalized, then the human capital shall be the differential in the future.
Can Technology overtake HR in Banking Sector?
Therefore, if banks have to undertake any significant changes to adapt themselves to the new competitive environment, one of the most crucial initiatives lies in organizing and preparing its HR to the requirement of competitive banking. The human asset being an intellectual asset, the new source of competitive advantage can be defined as the sum total of knowledge, skills, and competencies that an organization possesses. The fundamental principle of human resource management is to treat people as valuable assets.
Good HRM is to attract the best talent, retain and motivate them.
The performance of the banks (as any other service sector organization) highly depends on their HR. Hence, efficient and effective HR practices of selecting the right people, who would maximize value and minimize cost within the organization, remain a challenging task.
The core function of HRD in the banking industry is to facilitate performance improvement, measured not only in terms of financial indicators of operational efficiency but also in terms of the quality of financial services provided. Factors like skills, attitudes, and knowledge of human capital play a crucial role in determining the competitiveness of the financial sector. The quality of HR indicates the ability of banks to deliver value to customers. Capital and technology are replicable but not human capital, which needs to be valued as a highly valuable resource for achieving that competitive edge. The primary emphasis needs to be on integrating human resource management strategies with the business strategy. HRM strategies include managing change, creating commitment, achieving flexibility, and improving teamwork.
The other processes representing the overt aspects of HRM, In recruitment, placement, performance management, are complementary. Only one asset holds the power to differentiate banks in the competitive environment example, a dedicated, productive, and innovative workforce. No longer an organisation can afford to underestimate and demoralize its workforce to succeed at the expense of those who help and make success possible. Respect human dignity and have faith in every employee as a resource and potential asset while achieving organizational objectives efficiently. In short, banks have to invest in their workforce.
References:
01. Nanayakkara, G. (1999) ‘Changing Paradigms in Human Resource Management’, Institute of Personnel Management of Sri Lanka, Annual Conference.
02. Sangwan, D. S. (2005) ‘Human Resource Management in Banks’, IBA Bulletin, June, 09-15.
I agreed with the article, and you said the Human Resources are the most important element for the progress of banking. It's true, in a Bank, if the officer is not assisting the client, there are immediate problems occurred. While HR must always be sensitive to employee needs, as much as it must be sensitive to the clients in delivering "Better service" through its employees. So why Bankers make HR policies and implement them for their workers.
ReplyDeleteBut in future all banking activities transfer to the “Digital” System. Modern Banking HRM should be changed to digitalization. Currently, in the banking world, technological advancements are used by each bank and become one of the competitive advantages that have an impact on customer satisfaction and increased profits.
My opinion: HRM must do making HR policies, because there are some responsibilities for HRM managers: staffing, setting policies, compensation and benefits, retention, training, employment laws, and worker protection. So HRM must develop policies and get approvals from top management.
DeleteTechnology Advancement, I address this matter in my article under the “Can Technology overtake HR in Banking Sector?”
I agreed with the article, and you mentioned that human resource management is a critical component in the banking industry. A good relationship must exist between the employee and the customer in order to retain the customer. it is true. However, due to time and convenience, Sri Lankan banks have also resorted to digitization. In my opinion, Digital Banking is more helpful than employees' help in the banking sector.
ReplyDeleteI agreed with your Digital banking and digitization opinion, but its much to improve and most of critical parts cant be replace. Still HR most important part of banking sector.
DeleteThis is a nice article about HR in banking sector. As per my understanding, digitalization and human resource management should be equalized. Because there are certain processes like digital banking is very important for people. It saves the time of customers waiting time at the bank. However, on the hand Human Resource is important for banks because banking is a service industry. Though the banking sector has been identified as "People Business", It is a common complaint among bank executives that skilled manpower is in short supply. Hence HRD should implement strategies to overcome from this challenge.
ReplyDeleteI agree with article you have published here, a well-established HR policies and processors are key factor for productive and thriving organizational environment. With this era of technological advancements its key to enhance the skill of employees in the organization so that they feel valued. Once they feel that they are valued employees become loyal towards that organization.
ReplyDeleteVery good article. The core function of HRD in the banking industry is to facilitate performance improvement. Factors like skills, attitudes and knowledge of the human capital play a crucial role in determining the competitiveness of the financial sector. The quality of human resources indicates the ability of banks to deliver value to customers. HRM strategies include managing change, creating commitment, achieving flexibility and improving teamwork. Liberalisation has not only triggered changes in the whole economy, including the banking sector, but has also thrown up challenges for banks, in general, and public sector banks, in particular. Whether Human Resource Management (HRM), an important element in the business process evolution, post-liberalisation, has given a strategic telescopic focus is subject to debate. The primary emphasis needs to be on integrating human resource management strategies with the business strategy. HRM strategies include managing change, creating commitment, achieving flexibility and improving teamwork.
ReplyDeleteThis is really a good article about HRM in banking sector, Further I wish to highlight the requirement of HRM in the service organizations especially in the banks,
ReplyDeleteEmployees (human resources) directly interact with the consumers in the service organizations. Banks carry out business with the money of others. Hence special care & high vigilance from the part of the employees are required in the banks.
SHRM is required to formulate & implement policies & here shown few important facts.
- Professionally Skilled, educated, genuine & smart employees create positive image for the organization.
- Applying appropriate training & development sessions for the human resource development.
- Facilitate in formulating competitive compensation package for the organization & benefits for employees.
- Design fair & appropriate performance appraisal & promotion system which can be motivating factors for the employees.
- Rigid recruitment procedure is required to get eligible employees
- Retirement policies can also be useful to increase the efficiency & effectiveness of the service firms.
Thanks for your opinion, I discus about SHRM and IHRM in my other articles
DeleteThe transformation of the banking sector will not succeed without a transformation of it's management style. Most of the private sector banks has embraced new technology to enhance more productive business environment. as my opinion Management approach needs to be given greater consideration and banks will be likely need to redesign the work themselves and go beyond process optimization to find ways to improve human-machine collaboration. HRM is a key aspect that connects the modern world with the strategic management of the organization. The strategic management aspects are implemented through training programs, development, recruitment and selection of employees whose discussion material includes the ability to use the internet and e-commerce, so that the skills of the employees contribute to the competitive advantage of the company.
ReplyDeleteIn this article I'm not talking about the transformation of the banking sector, my main idea is to show how human resource management is a critical component in the banking industry.
DeleteI just mentioned the technology shift in the banking sector because HRM strategies and practices need to adapt to modern technology so that employees need to be more informed and smarter to deal with critical situations.
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