Citation
Pandey, S.C. (2015), "Re-engineering rewards and incentives - case of a large state owned bank in India", Strategic HR Review, Vol. 14 No. 1/2. https://doi.org/10.1108/SHR-11-2014-0058
Publisher
:Emerald Group Publishing Limited
Re-engineering rewards and incentives - case of a large state owned bank in India
A look at current trends and data
Article Type: Research and results From: Strategic HR Review, Volume 14, Issue 1/2
Satyendra C. Pandey
Satyendra C. Pandey is an Assistant Professor at the Centre for Management Studies, Hyderabad, India.
Continuous improvement in processes and practices of managing human resource is a fundamental requirement for all businesses. Similar to private sector, public sector companies are also confronted with the issues of rewarding, recognizing and incentivizing employees. An effective reward and recognition system provides a clear and visible message of the celebrated organizational values and commitment towards employees. In India, many companies are currently addressing the issue of employee recognition in their own way. Banking industry in India has become highly competitive with the entry of private and foreign banks. Private and foreign banks are launching attractive schemes for motivating employees. For public sector banks, which have existed for several decades, this is quite a challenge.
A public sector bank, State Bank of India (SBI), largest bank in the country in consultation with professors from Indian Institute of Management, carefully devised its reward and incentive scheme to keep intact the basic values of the bank. As chairman of the bank puts it “I am for those kinds of incentives that help them inculcate value and not encourage greed”. The programme being named as “Chairman’s Club”. Following subsections describe the process of selection, and the rewards thereof. (Figure 1 presents a flowchart of the same).
Figure 1
Flowchart of selection process for Chairman’s Club
Nominations
The bank provides, to all its branches, criteria for making nominations based upon a robust mechanism to check eligibility.
Eligibility
For Chairman’s Club any branch manager of National Banking Group/Rural Banking Group is eligible having a minimum continuous tenure of nine months as a Branch Manager, at the same branch, during the particular financial year for which he/she is being considered for the award. No ongoing or earlier disciplinary/vigilance proceeding record should exist for the person being considered for the Chairman’s Club.
Categorization of branches for administration of scheme:
BPR Centre branches: Branches that are supported by various BPR initiatives like Currency Administration Cell, various types of Credit Processing Cells, Liability Processing Cell, Central Pension Processing Cell, etc. Such branches are located mostly at metro and urban centres.
Non-BPR Centre branches: These branches are located at Semi urban and Rural centres, where BPR initiatives have not been rolled out.
Parameters for assessment
Two different sets of parameters are used for assessment of BPR Centre branches and Non-BPR Centre branches.
Percentage growth in monthly average deposits (excluding inter bank deposits, sundry deposits and banker’s cheques).
Percentage of achievement of deposits budget (excluding inter bank deposits, sundry deposits and banker’s cheques).
Process of award of marks
Corporate HR is responsible to reduce any kind of ambiguity and provide a scheme of award of marks under which all the parameters can be quantitatively measured and scored as flow of recommendations.
Being a public sector bank with a hierarchical structure (refer Figure 2 Organization chart), recommendation has to be made by the immediate supervisor of branch manager which in case of SBI is the Regional Manager. Responsibility of the Regional Manager is to compile the data for six branch managers under each category of branches (BPR and Non-BPR). The Regional Manager is accountable for accuracy of data provided against each of the parameter.
Figure 2
Organization chart
Once the recommendation is made, it reaches to the Network General Manager. The Network General Manager awards the scores to the branch managers, according to a predetermined scale. The form is then forwarded to the deputy General Manager who consolidates the recommendations received from all the network general managers in the circle. The responsibility of cross checking the scores awarded, tabulating the scores into two different categories of branches, ranking the officers according to the scores awarded in a descending order, ascertaining whether any disciplinary proceedings are ongoing/contemplated against the concerned officers, rests jointly with the DGM & CDO and AGM (HR) at the Local Head Office. Based on their recommendation, the Circle Management Committee (CMC) recommends the name of the top scorer to the Corporate Centre, for consideration for Chairman’s Club. A copy of the CMC note endorsing the selection- and parameter-wise scores awarded to the Branch Manager (top scorer) is forwarded by the Circle to the Chief General Manager (HR), Corporate Centre. The circle also forwards to Corporate Centre, an Annexure containing brief details of the officer being recommended for the award. On receipt of recommendations from the circles, these are scrutinized and put up to a selection committee consisting of DMD & CDO, DMD & GE (NBG), DMD & GE (RBG) and CGM (HR). The committee decides on the merits of each case, and then selects the awardees.
Selection/identification of awardees
Chairman’s Club: The best Branch Manager from each Circle (i.e. the officer awarded the highest marks from amongst the two categories), irrespective of the category of the branch, shall qualify for the Chairman’s Club.
Awards
Chairman’s Club Members:
Chairman’s Club members along with their spouse are felicitated by the Chairman. Chairman’s Club members have an option either to visit a combination of foreign/domestic destination(s), along with spouse and dependent children, or they can opt for a cash award of Rs 1, 50,000(rupees one lakh fifty thousand only), subject to recovery of income tax according to income tax rules.
The ceiling on expenses for a Chairman’s Club member on visit to a combination of foreign/domestic destinations, along with spouse and dependent children, is Rs 2.00 lakh (rupees two lakh only), including taxes.
Reimbursable expenses include airfare to the destination and back; passport and visa charges (including travelling expenses in connection with obtaining passport/visa; entrance fees for sightseeing).
Time schedule
The time schedule for the exercise every year is 15th May for recommendations from circles to reach corporate centre, Mumbai, and 1st July for declaration of awards by corporate centre.
Discussions
The rigor involved in selecting and rewarding exceptional achievers in a bank which has over 9,000 branches in the country is remarkable. Not only this, the bank instead of giving awards at the corporate office, made a change and invited the awardees along with their families to Chairman’s official residence. Chairman’s family also participates in this function. The kind of recognition that the bank bestows upon the awardees by inviting to the Chairman’s official residence is an unthinkable honour for most people.
Based on the success and reception of this system of incentivizing and rewarding employees, other public sector bank may also learn and incorporate such practices into their system.
Corresponding author
Satyendra C. Pandey can be contacted at: mailto:u510003@stu.ximb.ac.in