EMPLOYEE PRODUCTIVITY: PUBLIC SECTOR BANKS GAINING AN EDGE

EMPLOYEE PRUDUCTIVITY
	PUBLIC SECTOR BANKS			PRIVATE SECTOR BANKS
	2005-06	2009-10	GROWTH (%)	2005-06	2009-10	GROWTH (%)
No. of Employees	744333	734594	-1.3	110505	182284	65.0
Business/ Employee (Rs. Lakh)	366.6	870.3	137.4	670.9	798.4	19.0
Profit/Employee (Rs. Lakh)	2.2	5.3	140.5	4.5	7.2	59.

The ‘Profile of Banks' released by the RBI in September 2010 (covering the period 2005-06 to 2009-10) throws up a noteworthy piece of statistic. Led by Central Bank of India, Punjab & Sind Bank and United Bank, the average ‘business per employee' of public sector banks (PSBs) stood at Rs 8.7 crore for 2009-10, outdoing private banks (Rs 7.9 crore) for the first time.

Private sector productivity tends to be slightly overstated owing to the use of direct selling agents, who do not figure in the payrolls. A cutback in the deployment of these agents could have pulled down the employee productivity to a certain extent. Nevertheless, the gap has been narrowing over the last five years. In 2008-09, both public and private banks had an average business per employee of Rs 7.4 crore.

This rise in business/employee for PSBs this year is, no doubt, a function of the increase in total business (deposits and advances); for instance, IDBI Bank and Punjab and Sind Bank have seen over 200 per cent growth in total business in this period. Close on their heels are Corporation Bank and Bank of Baroda. In fact, the total business of the PSBs together has grown by 134 per cent, while that of private banks rose only by 96 per cent.

Whither employees?

A closer look reveals that a shrinking employee base has also helped in the increase in productivity. The three banks that witnessed highest growth in business/employee are also the ones that saw maximum employee exits. The employee strength of Central Bank and United Bank for example, have reduced by 20 per cent and 12 per cent respectively during this period. Thanks to superannuation and rationalisation efforts (VRS), the workforce has thinned for half the banks in the public sector. Overall, the total employee base for PSBs has, in the last five years, shrunk by 1.3 per cent. On the other hand, the employee strength of private banks has gone up by a robust 65 per cent during the same period.

Even as private sector banks still generate higher profits per employee, a look at the growth rates suggest that profit/employee of PSBs has grown at a faster pace than their private sector counterparts (140 per cent against 60 per cent). Improvement in efficiencies notwithstanding, private sector banks' profits per se have grown faster than PSBs (164 per cent vs. 137 per cent). This, perhaps, indicates that PSBs' strong show on the profits/employee parameter is also partly because of falling manpower.

Sentiments echoed

The trend of dwindling number of old hands has been noticed in the corridors of power too. The A. K. Khandelwal committee set up by the Government has said that PSBs seem to be facing a crisis of sorts, with almost half the top management retiring in the next couple of years, with no identifiable talent to replace them.

A recent survey conducted by the Boston Consulting Group too noted that in the next ten years, crucial competencies and knowhow will be lost as almost 80 per cent of the middle management and 50 per cent of the junior-most officers will move out of the system due to retirement. The productivity of PSBs, the survey states, has been stretched and cannot grow further without hiring new employees.

Damage control

Banks, big and small, have woken up to this reality and are actively scouting for talent. Aside of recruitment at the junior levels by almost all of them, banks are also keen on specialists for the middle management level. For example, IDBI Bank is filling over a thousand vacancies for managers.

Earlier this year, SBI announced recruitment of hundreds of specialist management (CA/CWA /MBA) and technical (B.E/B.Tech) manpower. Recently, Union Bank of India put out advertisements calling for engineers and chartered accountants.

Allahabad Bank, Punjab National Bank, Vijaya Bank and Canara Bank have opened up recruitment windows for law officers, and experts in economics, statistics and taxation. Dena Bank and IOB, too, had recently called for IT/Systems related manpower at the middle management level in recent times.

SOURCE: http://www.thehindubusinessline.com/2010/12/03/stories/2010120353340300.htm