HUMAN RESOURCES MANAGEMENT AND THE CHALLENGES
Human Resources Management In Banks
Employees are the most important and priceless resources in any organization. Human Resources Management has become more difficult and challenging since the competition among the industries is getting bigger and the volatile market conditions. The HRM process is getting more and more complicated due to the lack of skillful employees and higher expectations of them. However, it is the responsibility of the HR department to manage the human resources in the organization effectively and efficiently where they could gain the best outcome.
Strategic Human Resources Management plays an absolute important role while recruiting talented people, developing through training and groom them to achieve the common objectives and goals of the organization.
Challenges of Human Resources Management in Banking Industry
Employees are the most important and priceless resources in any organization. Human Resources Management has become more difficult and challenging since the competition among the industries is getting bigger and the volatile market conditions. The HRM process is getting more and more complicated due to the lack of skillful employees and higher expectations of them. However, it is the responsibility of the HR department to manage the human resources in the organization effectively and efficiently where they could gain the best outcome.
Strategic Human Resources Management plays an absolute important role while recruiting talented people, developing through training and groom them to achieve the common objectives and goals of the organization.
Challenges of Human Resources Management in Banking Industry
Employee retention is one of the biggest challenges in terms of human resources management in the banking industry. Newly recruited employees are leaving banks within a very short period due to various reasons. As identified by the author, continuation of higher education, better job opportunities, work pressure, attitude issues, family commitments are few of them.
As per the internal data sources of the bank which author works, the staff turnover ratio has increased up to 61% on last year 2019. Author has further investigated the issue and identified that the highest number of turnover generated from the sales related departments. As a result, the hiring cost has increased and there is a negative growth in terms of the revenue.
The competition is getting tougher in the banking industry due to the growing expectations of clients, innovative products and due to the leasing companies who offer similar benefits. Banks are setting up huge budgets for their sales forces whereas the staff benefits are less. Mostly the employees of the sales department are recruiting with fixed-term-contract basis and the basic salaries are comparatively lower than the permanent staff. Impressive Incentive schemes are being offered to motivate and inspire the sales department staff to achieve the given targets. However, most of the staff who are newly recruited, fall under the younger generation hence they prefer to have office-type jobs than visiting the clients outside the office and achieve sales targets. They are always looking for easy tasks and good salaries which are not dependable on variable factors such as sales targets. This has resulted in changing their mind-set and they are moving from banking jobs to another.
The employees of the sales department are required to go outside and bring new clients, open up savings accounts, current accounts, fixed deposits, credit cards, loans, through client visits. They are required to achieve specific sales targets in every month to continue their employment since most of the employees work on a fixed term contract basis. HR department hire them as business development officers and of them an impressive incentive scheme. However, the basic salaries are comparatively less than the commissions thus, they will always have to achieve their monthly targets to stay in their jobs. supervisors will also pressurize them and keep pushing them to achieve the sales budgets every time. Sometimes, they get anxious and depressed due to the sales targets whereas the employees who don't have previous experience of selling tend to leave the banks due to this reason. employees believe that the assignment targets are not realistic or unachievable. as a strategy human resource managers encourage the sales staff through promotions and giving them the opportunity to confirm as permanent employees. However, that is not making much progress in staff retention since the employees who have outstanding performance are very less.
Most of the sales staff leave the bank to join with insurance companies who offer impressive benefit packages including foreign tours. The insurance companies are providing air tickets including expenses for their employees who have exceptional performances. all the employees entitled with medical insurances fascinating incentive schemes and commissions along with bonuses. The younger generation is always preferred to have higher salaries therefore the insurance companies who offer the higher benefits influencing them to join.
Most of the banks maintain the sales teams in their head office as a separate department. The people who join the sales department are mostly the school leavers or inexperienced who have minimum educational backgrounds. The majority of the staff will recruit from outstations hence the Living cost becomes a huge concern. Accommodation, food, and transportation cost is comparatively more expensive in the Colombo area than the outstation. Staff get discouraged due to the high living cost and sales target pressure. It is the responsibility of HR managers to see the possibilities to implement the regional sales units and transfer the relevant staff closer to their Hometown.
The majority of the junior employees attached to the sales department are within the age limit of 22 to 30 years and Most of them are interested in their higher education. Therefore, junior sales staff leave the banks to continue their higher education. This has become a big challenge for the HR departments while recruiting the skillful employees and cost management for the new recruitments.
The culture in the organization plays a critical role in every bank since it has a direct impact on the revenue. The employee turnover has a huge impact on the culture development in banks since it takes time to recruit staff and make them adapt to the existing culture. HR management must closely guide them and make sure that all the employees are strictly adhering to the given guidelines in order to implement a healthy culture inside the banks.
As per the internal data sources of the bank which author works, the staff turnover ratio has increased up to 61% on last year 2019. Author has further investigated the issue and identified that the highest number of turnover generated from the sales related departments. As a result, the hiring cost has increased and there is a negative growth in terms of the revenue.
The competition is getting tougher in the banking industry due to the growing expectations of clients, innovative products and due to the leasing companies who offer similar benefits. Banks are setting up huge budgets for their sales forces whereas the staff benefits are less. Mostly the employees of the sales department are recruiting with fixed-term-contract basis and the basic salaries are comparatively lower than the permanent staff. Impressive Incentive schemes are being offered to motivate and inspire the sales department staff to achieve the given targets. However, most of the staff who are newly recruited, fall under the younger generation hence they prefer to have office-type jobs than visiting the clients outside the office and achieve sales targets. They are always looking for easy tasks and good salaries which are not dependable on variable factors such as sales targets. This has resulted in changing their mind-set and they are moving from banking jobs to another.
The employees of the sales department are required to go outside and bring new clients, open up savings accounts, current accounts, fixed deposits, credit cards, loans, through client visits. They are required to achieve specific sales targets in every month to continue their employment since most of the employees work on a fixed term contract basis. HR department hire them as business development officers and of them an impressive incentive scheme. However, the basic salaries are comparatively less than the commissions thus, they will always have to achieve their monthly targets to stay in their jobs. supervisors will also pressurize them and keep pushing them to achieve the sales budgets every time. Sometimes, they get anxious and depressed due to the sales targets whereas the employees who don't have previous experience of selling tend to leave the banks due to this reason. employees believe that the assignment targets are not realistic or unachievable. as a strategy human resource managers encourage the sales staff through promotions and giving them the opportunity to confirm as permanent employees. However, that is not making much progress in staff retention since the employees who have outstanding performance are very less.
Most of the sales staff leave the bank to join with insurance companies who offer impressive benefit packages including foreign tours. The insurance companies are providing air tickets including expenses for their employees who have exceptional performances. all the employees entitled with medical insurances fascinating incentive schemes and commissions along with bonuses. The younger generation is always preferred to have higher salaries therefore the insurance companies who offer the higher benefits influencing them to join.
Most of the banks maintain the sales teams in their head office as a separate department. The people who join the sales department are mostly the school leavers or inexperienced who have minimum educational backgrounds. The majority of the staff will recruit from outstations hence the Living cost becomes a huge concern. Accommodation, food, and transportation cost is comparatively more expensive in the Colombo area than the outstation. Staff get discouraged due to the high living cost and sales target pressure. It is the responsibility of HR managers to see the possibilities to implement the regional sales units and transfer the relevant staff closer to their Hometown.
The majority of the junior employees attached to the sales department are within the age limit of 22 to 30 years and Most of them are interested in their higher education. Therefore, junior sales staff leave the banks to continue their higher education. This has become a big challenge for the HR departments while recruiting the skillful employees and cost management for the new recruitments.
The culture in the organization plays a critical role in every bank since it has a direct impact on the revenue. The employee turnover has a huge impact on the culture development in banks since it takes time to recruit staff and make them adapt to the existing culture. HR management must closely guide them and make sure that all the employees are strictly adhering to the given guidelines in order to implement a healthy culture inside the banks.
Good article, you have mentioned high staff turnover situation your organisation. Is it common situation for all levels or depending on the job level
ReplyDeleteI really appreciate your feedback here Rajith. This getting muc worse in the bankig sector due to number of reasons and competition is the major reson from above all.
DeleteEmployee turnover is a major issue face by hr departments in banking sector. Specially among young employees turnover is very high in every bank in Sri Lanka. I also understand that Salary, working pressure and benefits are the major reasons for the employees turnover. HR department has to play major role for solving this issue.
ReplyDeleteIndeed Srimal, Also this gets more and more competitive due to the rivalry among the number of banks and the financial companies in the existing market. Banks also face ultimate challenge with this issue due to the thin margin of profits and the non-performing loans.
DeleteI agree there are many challenges to HRM in the banking industry. In your view what is the biggest challenge out of these?
ReplyDeleteAs I elaborated earlier, the employee retention is one of the biggest challenges in terms of human resources management in the banking industry.
DeleteThank you for this insightful introduction to human resources! Understanding the core functions and challenges of HR management is crucial in today's dynamic workplaces. As businesses evolve, the role of HR professionals becomes even more pivotal. Integrating advanced Hr Management Software can streamline processes like payroll, recruitment, and employee engagement, enhancing efficiency and compliance. It's fascinating how technology continues to revolutionize HR practices, empowering teams to focus more on strategic initiatives and employee development. I look forward to more articles exploring how HR management software can transform organizational dynamics!
ReplyDelete