Glacier Journal Of Scientific Research ISSN: 2349-8498

HRM PRACTICES IN SELECTED PUBLIC AND PRIVATE SECTOR BANK

Keywords: HRM Practices, Public Sector Banks and Private Sector Banks.

"Manuscript No.:GGIC/15/UAB-125"

1)SupriyaBalasahebGaikwad.

Research Scholar, Chh.Shahu Institute Of Business Education And Research, Kolhapur -4. Mo-9422300254,

Address- B6,sanjiv apt,dongarewadi,above bajaj service centre,janavli,kankavli-416602.

2) Prof. Dr. U.M. Deshmukh.

Chairman, M.phil.programme, Chh.Shahu Institute Of Business Education And Research, Kolhapur -4.

MO.-9890691927,

HRM PRACTICES IN SELECTED PUBLIC AND PRIVATE SECTOR BANK

1)SupriyaBalasahebGaikwad.

Research Scholar, Mo-9422300254,

2) Prof. Dr. U.M. Deshmukh.

Chairman, M.phil.programme, Chh.Shahu Institute Of Business Education And Research, Kolhapur -4. MO.-9890691927,

Abstract: This article enlightened the banking activity which thrives on the strength of people power. People are the direct factors of productivity of its services and people are its sole consumers. The literature study was conducted to explore the extent of human resource management (HRM) practices usually practiced by five prominent commercial Banks of India. The literature review were done in order to examine the issues involved in employee selection and recruitment, Training & Development, salaries and wages, job analysis methods, performance appraisal, employee participation, indicators to measure their levels of job satisfactions.

With nationalization, banks ceased to be funding agencies only for industrial sector and became a vivacious instrument of social change more statistical data are available in support of the preposition that there is a phenomenal. Being human resources are considered as a source of sustainable competitive advantage. The success of an organization depends upon several factors but the most crucial factor that affects the organization performance is its employee.

Keywords: HRM Practices, Public Sector Banks and Private Sector Banks.

I. Introduction

The study of human resource management practice has been an important and critical area in managementand organizational performance from last several years especially in the banking industry. Influence ofHuman Resource Management practices on organizational performance has been an important area of research in past 25 years indicating positive relationship between HR practices and organizational performance. Human resource management (HRM) practices are being increasingly treated as dependentrather than independent variables in the olden days, management gurus and researchers were involvedin exploring how HRM practices affected employee performance, and overall bank performance.

The banking industry, one of the major segments of the financial system plays a crucial role in the economic and social development of a country. A strong and healthy Banking system is indispensable in a modern society as a financial intermediary and occupies a unique position in a nation’s economy. Indian banking sector has been passing through different phases such as pre-nationalization, post-nationalization and post liberalization phase.

II. PUBLIC SECTOR BANKS

Public sector banks are those banks that are owned by the government. The government owns these banks. In India 20 banks were nationalized in 1969 and 1980 respectively. Social welfare is there main objective of these banks. They are divided into two groups i.e. Nationalized Banks and State Bank of India and its associates. Among them, there are 19 nationalized banks and 8 State Bank of Indiaassociates. Public Sector Banks dominate deposits and advances in the banking industry.Public Sector banks dominate the commercial banking scenario in India. These public sector banks canbe further classified into:State Bank of India2) Nationalized banks3) Regional Rural Banks

III. PRIVATE SECTOR BANKS

These banks are those banks that are owned and run by private sector. An individual has control over these banks in proportion to the shares of the banks held by him. Private sector banks came into existence to supplement the performance of Public sector banks and serve the needs of the economy better. As the public sector banks were merely in the hands of the government, banks had no incentive to make profits and improve the financial. The main difference is only that public sector banks follow the RBI Interest rules strictly but private sector banks can effect some changes but only after approval from the RBI!

IV. WHY HUMAN RESOURCE MANAGEMENT IS IMPORTANT FOR BANKS:

Human Resource Management is important for banks because banking is a service industry. Management of people and risk are two key challenges faced by banks. Efficient risk management may not be possible without efficient and skilled manpower. Banking has been and will always be a ‘People Business’. Though pricing is important, there may be other valid reasons why people select and stay with a particular bank. Banks must try to distinguish themselves by creating their own niches or images, especially in transparent situations with a high level of competitiveness. In coming times, the very survival of the banks would depend on customer satisfaction. Values need to be emphasized through concrete actions on the ground and it would be the bank’s human resource that would deliver this.

V.LITERATURE REVIEW

Several studies (Javed et al, 2012; Syed and Yah, 2012; Igbal, Malik and Ghafoor, 2013; and Price, 2004) were conducted on the impact of Human Resource Management Practices (HRMP) on job satisfaction among public sector employees in both developed and developing countries but few focused on private sector especially in Nigerian banking sector. Literature has failed to provide enough evidence in the role of Human Resource Management Practices in banking sectors. This research work is necessary at this time where many banks are thinking of merger and acquisition. This study aims to fill the gap in knowledge by focusing on the role of HRM practices in job satisfaction with special reference to selected banks in Nigeria.

Oyeniyi, K.O, Afolabi, M.A, Olayanju, Mufutau (2014) studied five HRM practices such as compensation practice, supervisory role practice, promotion practice, training practice and performance evaluation practice. Study is of selected six (6) banks in Nigeria. They recommended that bank authorities should encourage mentoring to be enhanced and there should be adequate training in the area of employees’ specialization through seminars and conferences in and out- side the country and also compensation and promotion should be improved as well.

Dr.R.Madhesh,(2014) investigated Human Resource Management Practices in Primary

Agriculture Co-operative Credit Societies (PACCS) in Tamil Nadu: Issues and Challenges ,concluded that Compared with all other management functions, human resource management in Primary Agricultural Co-operative Credit Societies is more sensitive, personalized and cannot

be managed through a set of predefined techniques. HR management is no longer just a support function but a strategic tool for competitive advantage. In fact, it is difficult to practice customer-centric strategic management without first achieving employee satisfaction. Thus, employee satisfaction is a prerequisite to customer satisfaction. Effective organization depends on having the right system of HR policies and practices in place to recruit, select, develop, appraise, compensate and place, promote or send away employees. Based on a careful analysis of the needs of the business, Primary Agricultural Co-operative Credit Societies must prior itize their choices around workforce engagement. Successful HRM requires practicing a sound management philosophythat respects human dignity and diversity, committed to the growth of employees, believe in the value of employee’s contribution and involve them in decision – making.

CH. Venkataiah, (2014) This research paper explores the relationship between strategic human resource management practices such as i.e. compensation, promotion, performance evaluation and perceived employee performance among the teachers working in B-Schools in Andhra Pradesh. The results of the study indicate perfect positive relationship among the independent study variables such as compensation practices, promotion practices, performance evaluation practices and dependent study variable i.e., employee performance. B-Schools need to focus on revising the compensation practices, promotion policies, performance evaluation systems and define clear career paths to enhance the performance of teachers.

Marwan M. Shammot, (2014) in his study identified role of human resource management in the realization of competitiveness in Industrial Organizations and has focused primarily on some important issues related to human resource management selection, training, motivating, attracting, employing, evaluating employees, and the setting of salaries, fees and rewards and the realization of competitiveness among business organizations. The study results showed that there is a significance relationship betweenthe factors such as; raining, motivating, attracting, employing, evaluating employees, and the setting of salaries,fees and rewards of employees and workers and the realization of competitiveness among industrial businessorganizations. And this result is consistent with the outcome of previous studies.

Mazni Alias et al, (2013), in their study they have developed the theoretical frame work for the workplace deviant behavior determinants such as “individual-related factors, organizational - related factors, and work-related factors”. It is found that the job satisfaction as a “mediating variable between the three potential groups of determinants and workplace deviant behavior”.

On the basis of the above review, the researcher has selected this study to examine the relationship between three Strategic Human Resource Management Practices i.e. compensation, promotion and performance evaluation and perceived employee performance. As these three Strategic Human Resource Management Practices have comparatively direct effect on the salary and status of an employee. Thus, it can be considered as the main factors determining the employee’s performance.

Dorothy OppongFrimpong, (2014) investigated the level of satisfaction of staff with human resource management (HRM) practices at the University of Education, Winneba (UEW), their level of commitment and their intention to exit and concluded that the high commitment of staff resulted from staff satisfaction with HRM practices. Again, the low level employee turnover stems from confidence of staff in the structure of the University. Lack of communication could be attributed to some lapses in the administrative procedures in the University. Based on the findings, it is recommended that the University reviews its training and development programs, explore several channels of downward communication, see to the implementation of its induction programs, and introduce the use of electronic-HR.

Iqbal et al, (2013) investigated the impact of HR practices on job satisfaction in corporate sector of Punjab- Pakistan. They discovered that supervisor role has strong positive effect on job satisfaction while compensation policy and participation in decision making have no significant effect on job satisfaction. Syed and Yah (2012) also examined the impact of high performance HRM practices on employee job satisfaction in China. They found that empowerment, job rotation, employee participation, merit-based promotion and performance-based pay and grievance handling procedures were positively correlated with employee’s job satisfaction.

Loo-See Beha and Leap-Han Loo, (2013) This study sought to investigate the relationship between best human resource practices and firm performance. The study found that performance appraisal, internal communication, SHRM alignment in the organization, and career planning were the human resource management best practices.

Parikshit Joshi, AnujSrivastava (2012) in their study they have studied the HRD practices in Indian PSUs by taking a sample size of 48 Managers and 300 employees using the simple probability random sampling method in IOC Mathura Refinery. The study has focused on seven HRD practices and found that there is no association among the study variables.

Dr.R.L.Laddha (2012) Employee welfare facilities enable workers to live a richer and more satisfactory life. After employees have been hired, trained and remunerated they need to be retained and maintained to serve the organization better. Welfare facilities are designed to take care of the well being of the employees, they do not generally result in any monitory benefits to the employees nor are these facilities provided by employers alone, government and nongovernmental agencies and trade unions too contribute towards employee's benefits.

The banking sector has played an important role in the Nigerian economy. However, despite all the good done by our banks, there has been a disturbing trend within the sector (Hamed, 2012). A decline in the economic growth and global financial crises have put these banks in a challenging situation through an impairment of their assets, pressures on margins and volatility in non-interest income; while an increased competition, higher cost of operation and regulatory tightening all add to the woes faced by these concerns ( 2013). Studies (Syed and Yah, 2012; Gürbüz, 2009 and Price, 2004) have shown that efficient usage of Human Resources Management (HRM) practices are the keys to achieve both short and long term objectives. Price, (2004) supported the assertion that employees constitute a vital part of organization resource, with the potential to enhance the organization’s sustainable competitive advantage. Lado and Wilson (1994) defined a human resource system “as a set of distinct but interrelated activities, functions, and processes that are directed at attracting, developing, and maintaining (or disposing of) a firm’s human resources.” HRM practices means that it is a set of policies and practices which boost up the firm’s human capital to contribute in the achieving of business objectives (Gürbüz, 2009). HRM practices involve organizational investments in individual employee’s training, decision-making and participation, promotion opportunities, and the use of performance contingent rewards and open communication, (Meyer & Allen, 1997).

Javed et al, (2012) investigated the impact of HRM practices on employee job satisfaction in Public sector of Pakistan. They make use of these practices; training and development, reward and recognition and their findings showed that recognition and training and development are a key source of employee job satisfaction in Public sector of Pakistan, while reward did not have any significant impact upon employee job satisfaction. Masoodul et al, (2013) also investigated the impact of HRM practices on employee satisfaction and employee loyalty among government owned public sector banks of Pakistan. Three HRM practices were used such as compensation, empowerment, and appraisal system. Their findings indicated that employee compensation is most important factor for creating satisfaction among employees, while employee empowerment found to be significant factor for developing employee loyalty.

KC Chakraborty, 2012 “HR Management in Banks- Need for a new perspective” concluded that

Human Resource Management is important for banks because banking is a service industry. Management of risks and Management of people are two key challenges facing banks. He has focused more on the emerging needs of HRM in banking sector in today’s world.

However, Adeel et al, (2011) had contrary opinion with Taseem and Soeters (2006) who affirmed that each of eight HRM practices has significant effect on job satisfaction. They investigated the impact of HRM practices on job satisfaction of University teachers in Pakistan Universities. Their result showed that compensation practices, employee performance evaluation practices, promotion practices and empowerment practices were not predict job satisfaction but other factors predict job satisfaction. Human resources management practices play a very crucial role in achieving the organization’s goals and maintain the competitive advantage. HRM practices refer to organizational activities directed at managing the pool of human resource and ensuring that the resources are employed towards the fulfillment of organizational goals (Schuler & Jackson 1987). Human resource management practices is the management of people within the internal environment of organizations, comprises the activities, policies, and practices involved in planning, obtaining, developing, utilizing, evaluating, maintaining, and retaining the appropriate numbers and skill mix of employees to achieve the organization’s objectives

ZulfqarBowra and KabirNiazi in their research paper “Impact of human resource practices on employee perceived performance in banking sector of Pakistan” (2011) found that The HR practices and employee perceived performance has positive and significant relationship and it is very crucial for banks to understand that their HR practices affect the performance of employees and in turn affect the overall performance of a bank be it private sector or public sector. Many researchers have recognized numerous HR organizing practices that significantly influence performance.

According to IngunnHybertsenLysø, KristianMjøen and Morten Levin (2011) in their

article “Using collaborative action learning projects to increase the impact of

Management development”- International Journal of Training and Development 15:3 –2011 Blackwell Publishing Ltd. mentioned that their article aims to contribute to the fieldof human resource development by exploring the conditions that influence theorganizational impact of action learning projects. Many organizations use such projectsas an integral part of their management development programs. Past research on actionlearning projects has shown how balancing action and learning improves theorganizational impact of management development.

In the same line, Asta and Zivile, (2011) examined the HRM linkage with organizational commitment and job satisfaction. Empirical result indicated that skill enhancing, motivation enhancing, and engagement enhancing HRM practices have a positive relations with effective human resource reaction i.e. job satisfaction.

Sulu Babaita ISIAKA (2011) in the study - Motives for Training and Management

Development in the Nigerian Banking Industry - Asian Social Science Vol. 7, No. 3;

March 2011 focused on the motives for training and management development using the

Nigerian Banking Industry as a case study .The study relied on both qualitative andquantitative analysis of data. The results of the analysis showed that banks see trainingand management development as important factors, as well having motives for investingin Training and management development. These motives include- new technology;productivity; responding to skills deficiencies; moral duty; new hire request; and staffrequest. Some of the recommendations based on the findings include- training should beseen as one of the most important strategies for organizations to help employees gainproper knowledge and skills needed to meet the environmental challenges; it must also benoted that, training and development, though primarily concerned with people, is alsoconcerned with technology, the precise way an organization does business.