Human Resource Strategy in Banking Industry
Introduction
The global improvement already affected different business industry. The evolution of technology is one factor to contribute the advancement of every sector of the business. When it comes to human labor, the involvement of the Human Resource Management is still visible because the productivity of every employee depends on them. The human resource department is an essential foundation in building a successful business enterprise.
In the view of a business, specifically in the banking industry, employees and technology usually work together. The bank feeds the information and process in acquiring technology and the employees are highly trained to drive the system. To make the harmony and standardization possible in the banking industry, the human resource fills the missing part of the story.
The Role of Human Resource in Banking Industry
The existence of a human resources department is vital to overall productivity and efficiency of the strong workforce in any thriving company. In most professional organizations, the role of the human resources department is not sidelined or eclipsed by other departments. In fact, good human resources can be one of the most valued and respected departments in an organization; their job is people, and people are the company’s most important asset.
One of the major roles of a Human Resource Department in a successful business involves a lot of observation and analysis from behind the scenes. The intelligence of the human resource staffs involves a compilation of complex data and metrics that follows the performance of individual employees. Their specific job is to make the workforce competent is a vital task. The sensitive nature of human relations and the work of human resource will adequately needed in making the management’s tough decisions. And the essential part is keeping a secret behind the close door meetings of who is going to let go, who is going to promote and who is going to hire1.
Human Resource Strategy in Banking Industry
The Human Resource is the only department that can measure the ability of an employee before deploying him into the actual work. The strategy of human resource manager is very reliable because he, includes the other human resource staffs, are well-trained enough to this kind of job. The human resource manager creates their own strategy depending in the nature of the business that needs them. When the banking sector goes to the human resource management to hire new employees, the first thing that a human resource manager will do is to look for the right specification of the worker that the company needed. After determining the specification and requirements, the strategy in hiring new and fresh employees are the next in the line.
In the works of (1997), they set a strategy that concerns in the Human Resource Strategy in Thailand. As application on their work, the study will present the following strategy that can help for the further study or if possible, actual implementation in one banking institution1.
This is one important factor that enhances their professionalism. Other factors include the fact that there is more competition in the industry and the new generation of managers who are better educated and well-trained in their professions. In the earlier stages, when banks were first set up to provide financial services, banks used to recruit their employees who may graduate with any field of studies at all. However, over time, the business schools and vocational schools have been able to train more people in business administration. Therefore, banks can recruit and select group of personnel with required skills. This has led to the improvement of these banks’ operation.
Most banks provide orientation programs for their new employees. Later on, these employees are expected to be acculturated into the bank’s system through on-the-job training. For the human resource development program, it has been found earlier that banks generally provide formal training programs for employees at the supervisory level and up ( 1989).
All banks now prefer to hire their employees with bachelor’s degree. However, with the competition from non-bank institutions in the labor market for the same pool of labor, many banks lowered their requirement for the qualifications of their employees to those with vocational college diploma in business administration area. This certainly necessitates these banks to focus more on human resource development activities to maintain the bank’s competitiveness. To ensure that the human resource will recuperate their investment in training their personnel, some banks have requested their employees to sign the contract or create some bonding contract that requires the personnel which will receive a certain training to pay back to the bank in terms of time or cash if they would like to quit the organization.
Most of the banks have an annual performance appraisal. Some, however, have the performance appraisals done twice a year. This is for the human resource development purpose for some banks. Most banks use their performance appraisals for the administrative purpose such as for pay raise and promotion consideration. Large banks generally have very elaborate systems of performance appraisal, such self-evaluation vs. supervisor evaluation. However, this is not very common.
Large banks whose systems are very well-designed provide feedback to their employees after they have been evaluated. If the subordinates do not agree on any points, they can appeal to their supervisor and to the upper management. All banks have formal system of employee performance appraisal in that they have forms designed to measure or appraise employees for particular qualities or competencies. Some may emphasize teamwork, creativity, and business code of ethics, etc. other than interpersonal skills or managerial skills, or technical skills.
Compensation in the banks nowadays varies. Most banks follow the market rate in each market segment. Thus, in order to be able to attract the job applicants, most banks will follow the market rates and will vary their fringe benefits to make their offers more attractive than their counterparts in the banking industry. The issue of external equity of pay seems to be an important one at the entry level. However, once become employees of a bank, the employees will also be compensated for their special skills, such as computer programming, accounting, or some other scarce skills. In general, for the Thai local banks, promotion from within practice has created a large internal labor market. All banks provide bonuses to their employees but generally no other financial gains. They do not have profit sharing plans and some incentive plans can be observed in the fact that most banks now considered their branches as their selling points and have these operate as profit centers.
Most banks in our sample have unions. However, unions are usually organized at the bank tellers and non-supervisory level. It can be said that unions in the banking industry are generally weak and their collective bargaining with the employers mainly include wages and fringe benefits. There have been no strikes. The unions are not very militant. The formation of bank unions is usually through bank employees’ “network”. Unions are said to be establish because the employees’ relationship with the management has been collaborative.
However, some cultural elements seem to facilitate their relationship with the management. The union representatives addressed the manager by their seniority in age and work experience in their interaction with the management. Thus, a certain level of consideration was given to the management side. This makes the management feels that they can negotiate and work out the agreement which would satisfy the needs of both sides. In today’s situation, some banks have also brought unions into their participative system of management.
They do have some employee involvement activities and currently many banks have set up “empowered work groups.” It is noteworthy though that the re-engineering process of the large banks has somewhat created a sense of job insecurity among some employees particularly those at the lower level. This could lead to a negotiation of the labor and management in the banking industry. A new unionism maybe expected for the next decade if this organizational restructuring process spreads out to other industries which are now faced with inefficiency of operation when entering into the global market.
IT in Human Resource
The Human Resource is also updated in the technological change. The technology gives a great help in every business industry. The importance of a technology is being shared in every parts of the organization to promote the accuracy and efficiency.
Acquiring a technology that can process the works of the human resource staff can make a difference and can finish the job in less than an hour. But the information system of the human resource department differs in the other field of business industry. And the appropriate process is a good partner in the business industry that includes the human resource department.
Recently, HR-IT has gained significance since most organizations have been using technology to transform HR, to increase HR productivity, to improve employee experience and to maximize the value of the company's most important asset- employees by aligning their skills, activities, and benefits with business objectives and strategies3.
The process that makes the work of a human resource staff that involves technology is usually covering the business role. These business roles are like Payroll Application, HR Application Outsourcing, Enterprise Learning Management, Portal Implementation/Integration and HR Analytics are key components of the solution set.
The use of technology in terms of payroll will secure that every entry are protected and cannot be manipulated. Still, the processes are set from the beginning of its acquisition that usually compacted in a template and uses security code for protection from the outsiders.
Conclusion
To make a business successful, the right selection of right person in right department is one factor that can create a great impact. The Human Resource is the only department that somehow brings the first impression in the attitudes of every applicant. The human resource are fully equipped and armed with a psychological knowledge that can interpret any person’s action and gesture. Through many behavioral exams and series of personal evaluation, the human resource manager can analyze and judge well the applicant.
Being a human resource manager is sometimes deceiving. Why? Because most of the human resource department has a good ambience and the attitude of the human resource can affect the other’s moods. The reason is to keep the chain between the employees and the higher management intact and to make an inviting communication.
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