Impact Assessment Of Hrm Practices In Consumer Banking Business Essay

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Lino Sau (2003) analyses the financial crisis of the late 1990's in East Asia by trying to explain the role of the credit institutions such as banks, brokerage firms etc in creating financial instability at a system level. This paper discusses the evolution of Banking Reforms with Information systems introduced with a primary focus on the financial instability in Asia as well.

In fact this paper tries to show that the overriding role played by the banks in the emerging economies such as Asian counties like Pakistan and UAE due to their strong information system which made it easier to get loans. This paper signifies the relation of banks with the financial sector of the economy also known as "social accountants". Banks specialize in the activity of selecting and monitoring the clients, recruiting the professional staff and establishing long term relations.

The broad set of variables that have influenced financial instability of banks identified in this research include inflation, financial instability of credit institutions and especially lack of control on the bank activities which gave rise to the excess indebtness. Indebtness tends to make financial structure of the banks increasingly fragile and it prompts them to reduce the credit given and to hike up interest rates. This is followed by drop in income and employment. Furthermore, due to adverse selection on basis of HRM practices the risk of unemployment goes even higher. In this paper the phenomenon of persistence of the fall in the real variables is explained by considering the process of debt deflation and the connected fisher effect. In this way leaving aside the aspects connected with the corruption of governors and bankers, this paper has highlighted how phases characterized by sound fundamentals ( high growth rates, low inflation, low unemployment) can lead to a process of overindebtness, self propelled by the financial and banking system.

Another paper named as "Towards HRM? A case study from banking" is written by Adrian Wilkinson. This case study seeks to critically examine the development of HR strategy in a bank. The experience suggests that whilst HR type policies are being implemented, the outcomes can by no means be taken for granted. This paper sets out to explore the development of Human Resource Management (HRM) in the Cooperative Bank. It briefly discusses the literature on management strategy and employee relations and the rise of Human Resource Management. An overview of employee relations in banking is observed in order to have a analysis of HRM in co-operative banks.

The researcher adopted a top-down, Qualitative approach to the research, which allowed for the "capture" of strategic change, as this way was deemed the most appropriate method for examining the relationship between business strategy and the management of labor. The approach towards the HRM and the new strategies that are being implemented towards a efficient HRM system are Industrial relation, Cost control, changing culture and changing role of personnel and line managers. The sponsorship of the research by the organization enabled a high access to be achieved. 'While a case study is not capable of statistical generalization, the prospective generalization of a case study lies in analytical generalization. The response of the Bank employee and management relations to changes in the financial sector which has been experiencing money depreciation, increasing competition, technological innovation and an increasingly discriminating public. As greater diversity begins to exist amongst the retail bank the study explores the Bank's attempt to find itself a niche or adopt a focus strategy. The case of the Co-operative Bank sheds light on the issues of human resource management discussed in the management literature. It was suggested that a shift from an administrative to a market driven organization would lead to a greater priority for the management of human resources. Thus one consequence of the Bank's HRM policies was probably worsened employee relations, even if bottom-line performance improved. However, one needs to bear in mind that the ultimate aim of HRM is better business performance rather than improved relations with the workforce. This may be something Personnel and HR managers, whether in the UK or the Pacific need to come to terms with. Of course it is too early to evaluate the success of introducing HRM.

The next paper that is "The decline, flexibility and geographical restructuring of employment in British retail banks" written by Antonia Sinden highlights the nature, and discusses possible causes, of three aspects of recent employment change in retail banking - job loss, rising flexibility and geographical restructuring. Due to lack of HRM practices or training there is a huge impact on the British banking system. Large scale job losses are argued to have resulted from the interaction of deregulation, technological advancement and increased competition with rising corporate pressure to maximize profits. It is shown that while work organization in retail banks is becoming more flexible, individual jobs are more rigidly defined and constrained than previously. All this Job losses are shown to have been heavily concentrated in South East England. Evidence presented here supports and reinforces recent claims that there has been a diminishing of the British 'north-south divide' in economic development which was observed by many geographers over the 1980s.

Growing competition has also encouraged financial instability among the banks as the deposits are scattered and people find convenience rather then loyalty. A further response to growing competition within a relatively stagnant market has been a wave of take-over and merger activity between banks and building societies. The preceding description and analysis of employment decline, flexible labor organization and geo-graphical employment restructuring in retail banking demonstrates the fundamental and far-reaching nature of recent employment developments in this sector. This paper has argued that British retail banks have responded to the pressures of a more competitive environment with efforts to increase efficiency and reduce costs through significantly reduced staffing levels (often enabled by technology) and through the functional, temporal and spatial redeployment of many remaining staff. Fashionable concepts such as downsizing and flexibility are part of the new corporate culture in British retail banking, where the primary aim is to provide higher levels of service at lower costs. The advent of a national recession during the period of major restructuring by the retail banks contributed to the need for more stream-lined operating procedures, but may also have made the process of 'downsizing' less painful and less dramatic than it might otherwise have been. This paper therefore extensively describes the reasons of decline in the British banking system.

Mankidy (1996) discusses that the reforms that have paved its way towards a changing employment relation in banking. The various changes that have taken place in the employment of banking industry due to globalization and liberalization are the dependant variables of this article. The dependant variables of this article are the attitudes of individual employees, the unions, the management, technology and changes in the bargaining system.

Industrial relations help in increasing experiences for the employees and nowadays going through a massive transformation. In this research paper the author discusses the impact of increase of banking network in India. There has been a huge impact of globalization for the Indian banks that has thrown them into national and international competition. New strategy has to be devised that the available HRM will respond positively to the clients and employees themselves. In the early sixties and seventies the trade unions helped to formulate rules and regulations whereas now there is a huge emphasis on individual employee relations. There are visible changes in employee composition as well. Before the women were never used to be hired for banking services but now women employee entering Indian banks is on increase. There is a change in the trade unions and officers association as well where pacts are being signed to cooperate and circulated among employees for efficient performance. The author also explains management's role in developing complementary HR/IR process in banks. He explains that the shift from "system-driven" to "people oriented" management approach has played a vital role in broadening top level manager's role. The emerging decentralized bargaining trend is certainly leading to several negotiations at bank level. This helps to have interactions for the more competitive rules and procedures in banking network. This would also alter the HR processes giving a positive impact to banking arrangements.

Nowadays the workforce of employees is more educated and experiences therefore the much is expected from the trade unions and management of employees to bring about changes in the organizational setup that in return give profits. Hence HRM is a integral part of a bank's operations and both trade unions and management improvement techniques can pave the way in conducive employment relations in banking.

Another web article is "Human resource management and the banking sector" written by Imran Samad discusses how Human resource management (HRM) has long been overlooked in the corporate sector in the country where a small section, comprising mostly the multi-national companies was practicing the same. 

He highlights that almost every bank and financial institution is involved in various functions in a day's job and thus requires a highly effective team and appropriate manpower to run the show. Corporate goals are translated into viable realities and profits only with human element that play their due role in achieving the desired results. Thus even the high automation would require proper man behind the machine to make things happen. This idea has been realized by top managements in progressive banks.

The author tells that like many other organized sectors, banking requires multi layer manpower for its various requirements of professionals and support staff. The range may require reasonably educated security guards on the one end and a highly educated and trained professional as head of corporate finance at the other. With liberalization of activities within the banking sector, for example, more emphasis on consumer and house finance and personal loans, etc. banking has turned itself into a more market-based business where banks have expanded their reach more to customers' door steps in a big way making banking more practical. This has further highlighted the need for proper deployment of man-power to run banks efficiently. The different variables discussed in this article are Effective work force, Right people, Compensation and morale boosting are major determinants of effective impact of HRM assessment in consumer banking. In short, Banking jobs being apparently lucrative for many attract a large number of candidates against advertised vacancies in media creating a large data base management problem. This has been facilitated by specialized hiring agencies who may take up the job of hiring in case of large number of vacancies. 

"Analysis of training in consumer banking" written by Muhammad Tahir basher and Jesus Carlos highlights the role that training plays in the success or failure of sales in consumer banking practices. The author has taken two branches of two different cultures and used questionnaires as primary source to distinguish between the practices used to train employees in banking system. The author has done a case study on Citibank focusing on branches in Spain and Pakistan.

The study shows that training plays an important role in sales and satisfaction of clients. It also helps to develop personnel skills of employees and hence contribute in generating profits. The scope of the problem in this research is that every corporation is profit oriented and three major variables are revenues, cost and taxes. All these variables have a direct impact on sales training because most of the costs spend on other expenses leaves very little budget for the sales training. The problem which this industry faces is that in some banks, the sales teams have a lot of formalities or paper work that leaves training in a second place. Training is not the one element needed to have success in the work place. Experience and genetic plays an important role in the satisfaction of the customer. Experience is related with the logical consequence of increasing the repetition of a task and the quality of the performance will increase as well. The author has used the data from two different cultures to evaluate the major differences in training practices of sales force in consumer banking. This entails that in more developed countries training of employees is essential because the customer's needs and demands are more whereas in less developed countries more emphasis is laid on marketing as in to target large number of consumer or clients.

The author explains that by training the staff one can achieve Total quality management hence fewer complaints, enhance employee skills, Increase motivation in the workers, Increase self-confidence, Increase work force flexibility and higher job satisfaction. It also discusses the methods of training like the cognitive and behavioral methods. The research concludes that increment of productivity and the costumer's satisfaction are the main effects of training in the banking sector.

"A study of chain management and challenges in a bank" is another article written by Yin Teng Chew and Siew Ming Choo. The dilemma faced by many businesses today is managing strategic change initiatives efficiently and effectively. Arguably, managing changes simultaneously poses great challenges to organizational success in terms of the desired change. The purpose of this paper is to discuss the driving and resisting forces that occurred during a transitional programme in a Malaysian bank. Issues in the implementation process include change initiatives and the challenges that were faced. Qualitative data indicated that while the implementation process and efforts were genuine, they were fraught with various technical and HR problems, and it was found that change efforts lacked integration and attention to human issues. Change efforts mainly focused on business and cost driven initiatives. This observation suggests that organizational leaders should give careful attention to how each activity can be designed and well integrated when planning and implementing organizational change. The paper discusses the implications of these finding on HR policies and practices in financial institutions.

The dilemma faced by many businesses today is managing strategic change initiatives efficiently and effectively. Arguably, managing changes simultaneously poses great challenges to organizational success in terms of the desired change. The purpose of this paper is to discuss the driving and resisting forces that occurred during a transitional programme in a Malaysian bank. Issues in the implementation process include change initiatives and the challenges that were faced. Qualitative data indicated that while the implementation process and efforts were genuine, they were fraught with various technical and HR problems, and it was found that change efforts lacked integration and attention to human issues. Change efforts mainly focused on business and cost driven initiatives. This observation suggests that organizational leaders should give careful attention to how each activity can be designed and well integrated when planning and implementing organizational change. The paper discusses the implications of these finding on HR policies and practices in financial institutions.

Another article is "how will competition change Human Resource Management in banking" written by Larry W Hunter. This paper applies the strategic perspective to interviews and surveys of retail bankers, and considers the possibility those commitment-based practices characteristic of the "High-Performance Workplace" might be adopted in the industry. The data suggest that practices associated with High-Performance Workplaces have not generally found their way into retail banking. However, if they can be shown to create capabilities that banks value. Retail banks may be strong and independent lines of business, but this is not always the case. In some organizations the role of the retail bank is chiefly to generate low cost funds for larger holding companies and in many holding companies the retail bank has had lower status than other somewhat more central and influential areas. For example, a merger might be driven by the desire to achieve presence in new wholesale markets, with the entire retail bank brought along in the merger almost as an afterthought. This may weaken or alter expected links between corporate strategy and the management of human resources in the retail bank.

In addition to its contribution to broader corporate aims, a retail bank may also have a

Competitive strategy of its own. An increasingly dynamic, competitive environment characterizes consumer financial services. Changes in regulation have given rise to an extensive increase in interstate banking. New technologies for delivering financial services continue to be developed rapidly. Banks face a variety of non-bank competitors; increasingly these other institutions are attracting investment funds (e.g. the dramatic increase in mutual fund holdings) and other products (e.g. alternatives for automobile and home equity financing). This new environment is forcing retail banks to move to more entrepreneurial, sales-oriented practices if they are to continue to thrive. In retail banking, uncertainty lays both in understanding the potential value of particular business strategies, and in seeing what sorts of outcomes different HRM systems will produce.

"Do human resource management practices have an impact on financial performance of banks?" is written by Tahir Masood Qureshi. This study is conducted based on universalistic

Perspective, indicating that fixed set of best practices can create surplus value in various business frameworks. Justifying our choice for the universalistic perspective, the Harvard model by Beer et al. (1984) guided the initial process of domain identification. In this study, the most relevant HRM domains (e.g. selection, training, job)

Description, performance appraisal system, compensation system career planning system and

Employee participation) followed by universalistic perspective are selected for research. In the field of human resource management and behavioral sciences, plenty of example and discussions are highlighting that there is an uplifting connection between effective HRM

Practices and organizational performance.

Human resource management (HRM) practices are being increasingly considered as major contributory factors in financial performance of organizations. This research study effectively highlights the importance of HRM practices with impact on financial performance of banks (FPB) operating in Pakistan. The major objective of the study is to find out the relationship between 'HRM Practices' and the 'Financial Performance of Banks'. As a sample, 46 scheduled banks were contacted, of which 38 responded. The HRM practices selected for the research study were selection, training, performance appraisal system, and compensation system and employee participation. Empirical evidence was calculated through stepwise regression analysis, Pearson correlation and descriptive statistics to support theoretical models that link HRM practices with financial performance of banks. The study concluded that all tested variables have a positive relation and impact on financial performance of banks but the major contributory practices are selection, training, compensation and employee participation.

The fourth article is "the theory of banking firm" written by James A. fellow. This research paper basically defines how the commercial banking output influences the different variables in successful banking practices such as Finance, Marketing and HRM policies. This author has identified different banking output marginal models to explain his theorem and to apply his theories on the banking practices being held today. The author has also identified the earlier models of the banking system and later goes on to explain the modern theorem of commercial and consumer banking. The theorem is designed by the dependent variables of MC and MR that are used to make a graphical diagram of the marginal cost commercial banking theory.

This paper has attempted to show that a true theory of the banking firm is incomplete unless it takes into account two important factors. First, costs of acquiring different assets are indeed not the same and should be explicitly considered in any model of the banking firm. Secondly, any equilibrium must be a general equilibrium, i.e., a simultaneous equilibrium must be reached in both the asset and liability markets. To develop equilibrium in only one market is neglecting the fact that banks, like all other firms, transform inputs (deposits being the input in the bank's production function) into outputs (loans). And as with any firm, equilibrium in the output market is obtained only if there is equilibrium in the input markets.

Theoretical Framework

Employee Motivation

Performance Appraisal

Increased banking competition

Academic Background

Male or Female


Compensation Benefits

Training and Recruitment

Gender discrimination

Work Experience

Impact of HRM practises in Banking

Financial Performance

Technological Advancement


H0: Gender discrimination plays a important role in HRM practises

H1: gender discrimination does not play an important role in HRM practices.

H0: Training and recruitment is positively related to HRM

H1 : Training and recruitment is not positively related of HRM.

H0: Academic background and background is vital for recruitment done by HRM employers

H1. Academic background and experience is vital for recruitment done by HRM employers