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CONCLUSIONS AND RECOMMENDATIONS
156
This chapter describes the major findings of the data analysis so that conclusive
remarks can be made. The significance, limitations of the study and scope for further
research have also been discussed in this chapter.
5.1 CONCLUSIONS
In the present competitive world, the banking sector, especially of the developing
economies like India, is facing lot of tough competition, talent crunch, and skill shortage. All
these have made the banks feel that the internal customer is also more important equally with
external customers, so every bank is trying to devise innovative HR practices to attract best
talent and give them comfortable environment to work with, that enables the banks to retain
talents. Chakrabarty (2012) has highlighted in one of his speeches on HRM in banks that four
key challenges are being faced in the HR management of the banks. Those are planning,
acquiring the right people, retaining/developing the people, managing people’s
separation/exit. There is no need to emphasise that it is the people, people and people that
make an organization achieve competitive advantage in this tough and competitive world.
The people (human resources) in an organization, when looked after and provided with
enough motivation, will certainly pay back in terms of better results, better performance and
enhanced productivity (Kundu and Malhan, 2009). Therefore, the main focus of the present
study was on understanding some of the innovative HRM practices that stem from
functionally logical strategic initiatives in response to a hypercompetitive, complex but
opportunity-rich environment, which has opened up in Indian banking sector due to the
economic reforms. These innovative HRM practices are not a random collection but practices
which may be considered as “best” practices by the HR department of these banks and which
have yielded excellence in performance.
CONCLUSIONS AND RECOMMENDATIONS
157
5.1.1 Innovative HRM practices
The present study has explored many new and innovative HRM practices have been
explored, which are applied differently in different banks of India. A total of forty nine
practices under seven comprehensive heads of HR variables: recruitment & selection,
training and development, performance management, compensation management, career
development, employee motivation and employee security have been discovered in the
present study.
Innovative Recruitment & Selection Practices
The nine innovative HRM practices identified under this head have been well defined
R&S, selection according to service attitude, holding on policy, availability of bank
communities on social networking sites, checking the profile of candidates on these
sites, selection of professionals just like MBAs, CAs, etc., written exam for R&S,
result oriented policy of R&S, and formal induction of new candidates.
Innovative Training & Development Practices
The test of trainees, job rotation, customised training, continuous training need
assessment, regular training, encouragement to apply training learning, and
arrangement of special projects have been the seven innovative Training and
Development practices found in the present study.
Innovative Performance Management practices
Under the head of Performance Management practices, six innovative HRM practices
were explored in the present study which are: formation of performance matrix, goal
review based appraisal, appraisal on fair objective data, 360 degree performance
appraisal, option to challenge the appraisal and full awareness of the performance
appraisal policy.
Innovative Compensation Management Practices
Announcing special incentive to the talented employees, special increments on
regular basis, special festival advance, and customised perks have been four
CONCLUSIONS AND RECOMMENDATIONS
158
innovations found to be prevailing in the banks, under the head of innovative
compensation management practices.
Innovative Career Development Practices
Availability of educational opportunities at workplace, easy approval to the job
applications, preference to seniority in promotions, promoting in the basis of merit,
and providing faster promotions have been the five practices discovered under
innovative Career Development practices.
Innovative Employee Motivation Practices
In the present investigation, eleven innovative motivation practices, identified under
this head, have been using music at work place, providing day care centres, work
autonomy, making available ESOPs, providing loans at discounted rates, giving an
option of flexible working hours, approving leave applications easily, organising
stress management programs, encouraging team building attitude, giving best
employee awards, arranging family get-togethers. State bank of India has introduced
the concept of playing light music in its branches to provide a calm and soothing
environment to the employees as well as the customers.
Innovative Employee Security Practices
Provision of sabbatical leaves (part time leave from bank with 50% or less salary in
case of crisis), sufficient retirement benefits, option of voluntary retirement,
insurance of dependents, security to the employee that he would be last to leave the
organisation if some uneven happens, proper grievances procedures, full support
from the regional or central office are the seven Innovative Employee Security
practices found in the present study. Infosys started giving sabbatical leaves to its
employees in India so that they may get job security. This practice was followed by
HDFC bank and then the others also started using this HRM practice.
5.1.2 Level of Implementation of Innovative HR practices
Now, the root questions of the research were “To which extent these innovative HRM
practices are being implemented in these banks and how much important these are for the
CONCLUSIONS AND RECOMMENDATIONS
159
Indian banks” The conclusive results of the level of implementation of these innovative
HRM practices have been summarised below:
Almost all the innovative HRM practices explored in the study are conceived and
implemented to a moderate level in all the surveyed banks under the study while a
few among these are being used at a greater level and a few at a lower level.
Innovative performance management practices have been revealed to be used at the
highest level among seven heads.
The new and improved practices of employee motivation are shown to be
implemented at lowest level.
5.1.2.1 Factor wise implementation of innovative HRM practices
An in-depth analysis of these all forty nine innovative HRM practices indicated that a
lot of innovations are being used in the banking sector to a great extent. However, some
banks are using these practices occasionally just for the sake of name. But a few innovative
practices are being implemented to a very low extent which might lower down the morale of
the employees. The ultimate effect will be on the employee productivity.
Innovative Recruitment and Selection Practices
The selection of professionals like MBAs etc. is the most implemented Recruitment
and Selection practice followed by a well defined recruitment and selection policy.
However, the results also showed that the least implemented practice is checking a
new candidate’s profile on social networking sites.
Innovative Training and Development Practices
The highest implemented practice under this head is found to be the customised
training for each employee. Needs based training has also been stated to be important
in the earlier researches (Kundu, 2000; Bitner & Zeithmal, 2001; Aggarwala, 2003;
Kundu & Malhan, 2009). Sending the employees for special projects of training is
lowest in terms of its implementation as compared to other innovations under this
CONCLUSIONS AND RECOMMENDATIONS
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section. Almost, all practices under this head are shown to be used at more than
moderate level.
Innovative Performance Management Practices
Goal reviews based appraisal is the highest scoring innovative practices selected to
this factor. The performance appraisal information is also being clearly
communicated to the employees, to a high extent. The same has been confirmed by
a few of the earlier researchers like Landy & Far (1980); Bernardin and Russel
(1993); and Webb (2004). However, there is still a lack of authority with these
employees to challenge the appraisals made for their performance as the mean score
for this practice is the lowest.
Innovative Compensation Management Practices
The incentives are being distributed to a high extent to the talented employees so
that they may work with more enthusiasm and zeal. On the flip side, customised
perks are not being provided to a high extent in these banks.
Innovative Career Development Practices
Meritorious and seniority based promotions are the most implemented practices.
But there is lack of easy approvals of the applications of the employees for outside
jobs. All the practices under this head are undoubtedly implemented in the range of
moderate to high level.
Innovative Employee Motivation Practices
Another finding of the present study was that the employees of these banks are now
being able to have discounted rates on the loans. The extent of implementation of the
practice of providing Day care centres is very low. To release the high work pressure
and make the employees more comfortable, stress management programs, family get-
togethers and use of music at the work place are the best ways. But, the analysis of
results showed that either the extent of applying these practices in the banks is low or
these are being practiced occasionally. Practices like easy leave sanctioning, team
building, best employee awards and work autonomy are found to be implemented at
more than moderate level.
CONCLUSIONS AND RECOMMENDATIONS
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Innovative Employee Security Practices
It has been found in this study that the employees are being incentivised by sufficient
retirement benefits and support by the central offices to a high extent when they find
any kind of problem. However, the practice of giving sabbatical leaves to the
employees in these banks is not in a great trend.
5.1.2.2 Comparison of the Level of Implementation of These Practices between Public
and Private Sector Banks
The evidences presented in the earlier chapter suggest that, in the area of innovative
HRM, organizational policies and practices in the public and private sectors remain different
in many important respects.
It has been found that the private sector banks are far ahead of the public sector
banks regarding the implementation of these practices. This result has been strongly
supported by few earlier studies also (Katou and Budhwar, 2006; Purang, 2006;
Dimba and K’Óbonyo, 2009).
When tested for statistical significance, the results of t-test revealed that there is a
significant difference in the implementation of Innovative Performance
management practices, Innovative Employee Motivation practices and Innovative
Employee security practices in public and private sector banks. This implies that the
private sector banks are doing better in terms of these three variables of HRM
innovations. Our results are also supported by a study by Budhwar and Boyne (2004),
in which they found that, in a few HR functional areas (for example, performance
appraisal, compensation and training and development), Indian private sector firms
had adopted a more rational approach than their public-sector counterparts.
The other four types of practices, named innovative recruitment and selection
practices, compensation practices, training and development and career
development practices, have been disclosed to be implemented at different levels in
both types of banks but that difference is by chance only, when tested statistically.
CONCLUSIONS AND RECOMMENDATIONS
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The same has been supported by few researchers in their studies while making a
comparison between public and private sector organisations (Budhwar, 2000; Sharma,
1992; Budhwar and Boyne, 2004).
5.1.2.3 Inter- Bank Comparison of the Level of Implementation of These Practices
The level of implementation of these innovations in the surveyed banks varies
individually too.
Although the implementation of these innovative HRM practices in all these banks is
to the moderate extent (more than 3), but when a comparison was made among
different banks under the study, it was found that only two banks that of private sector
are the leaders in terms of implementation of these practices, i.e., HDFC bank and
YES bank.
HDFC bank is implementing innovative training and development, compensation
management, career development and employee motivation practices to the highest
extent among all the banks under study.
YES bank is the highest in the race of implementing the innovative recruitment and
selection, performance management and employee security practices.
Axis bank, a private sector bank, is found to be implementing the Recruitment &
Selection, Training & Development and career development practices at lowest
extent.
OBC is discovered to be implementing the performance management and
motivation related innovations at the lowest level in comparison to all other banks
surveyed in this study.
Innovations in compensation related practices are shown to be applied at the lowest
level by Central bank of India.
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163
Surprisingly, Employee security practices are found to be practised at the lowest
extent by the SBI, which is actually the No. 1 bank among public sector banks of
India.
The results of individual ANOVA tests depicted that there exists no significant
difference between the implementation of the innovative recruitment and selection
practices, compensation practices, training and development, career development and
employee motivation practices among all the surveyed banks.
On the contrary, a significant difference exists among all these banks in the
implementation of the performance management practices and employee security
practices.
Approximately same results were found when both the sectors were compared overall.
This solidifies the results of the present study again.
5.1.2.4 Comparison of the Perceived Responses of the Employees of Different
Designations Regarding Level of Implementation of These Practices
A designation wise analysis was also made in the study and it was concluded that
assistant managers, mostly the young and post graduates, feel that the level of
implementation is more than moderate in their banks. Their perception about the
level of implementation is discovered to be the highest in case of innovative
recruitment and selection, training and development, performance management,
compensation management and employee motivation practices.
The senior managers of these banks also support the same view point in case of
career development and employee security related practices.
The results of the ANOVA for checking the significant difference in the opinions of
different levels of employees showed that the responses of the different employees
differ because of no reason in case of all the innovative HRM practices except in
case of Training and development related practices. This signifies that the different
CONCLUSIONS AND RECOMMENDATIONS
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levels of employees might be thinking differently about the implementation of these
practices in their banks but that difference is not statistically significant.
5.1.2.5 Comparison of the Perceived Responses of the Graduate and Postgraduate
Employees Regarding Level of Implementation of These Practices
The results showed that the post graduates think that all these practices are being
implemented in their banks at a higher level.
But when checked hypothetically, by applying independent samples t-test, it was
found that there exists no significant difference between the opinions of both the
group of employees. If any difference exists then that is by chance only. Thus,
education level has no role to play in the difference of opinions regarding the level of
implementation of innovative HRM practices in banks.
5.1.2.6 Comparison of the Perceived Responses of the Male and Female Employees
Regarding Level of Implementation of These Practices
The mean results signified that the perceptions of males depict that the innovative
HRM practices are being used more in their banks as compared to that of the female
employees.
The results were also cross-checked for any gender impact and it was found that there
is no significant difference between the perceptions of the male and female. Thus,
the level of implementation of these practices doesn’t differ on the basis of gender.
5.1.3 Impact of Innovative Human Resource Management Practices on Employee
Productivity
In the further analysis, it was found that there exists a relationship between all the
seven innovative HRM practices and the employee productivity factors. To sum up, a well
defined relationship can be established on the basis of the research carried out in this study.
Figure 5.1 explains this relationship based on the reviewed literature and the present study.
CONCLUSIONS AND RECOMMENDATIONS
165
Figure 5.1
Relationship of Innovative HRM practices and Employee Productivity
Three different Discriminant equations were found in the results of three different
Discriminant Analyses which establish a good relationship between the innovative HRM
practices and the employee productivity factors.
Discriminant Analysis for HR performance
In the discriminant analysis of HR performance, where HR performance was taken as
dependent variable, it was shown that the innovative recruitment and selection
practices of these banks are the important determinants of the HR performance of
the banks. Innovative recruitment and selection, performance management and
employee security practices have been found to have a positive impact on the HR
performance. Whereas, training and development, Compensation Management,
CONCLUSIONS AND RECOMMENDATIONS
166
Career Development and Employee Motivation innovations are found to be
negatively influencing the HR performance as shown in the equation given below:
HR performance = 1.335 (Innovative Recruitment & Selection) -0.354 (Innovative
Training & Development) + 1.061 (Innovative Performance Management) -0.103
(Innovative Compensation Management) -0.403 (Innovative Career Development) -
0.034 (Innovative Employee Motivation) + 0.346 (Innovative Employee Security) -6.543
Discriminant Analysis for Financial Performance
The Discriminant score for knowing the impact of all innovative HRM practices on
the financial performance of the employees can be found out with the help of the
Discriminant equation is given below:
Financial performance = 0.411 (Innovative Recruitment & Selection) -0.500 (Innovative
Training & Development) + 1.411 (Innovative Performance Management) +0.072
(Innovative Compensation Management) +0.133 (Innovative Career Development) +0.302
(Innovative Employee Motivation) -0.012 (Innovative Employee Security) -6.218
The results of Discriminant analysis of innovative HRM practices and financial
performance indicated that the main factor for assessing the financial performance is
Performance Management related innovations. Other innovative HR practices
related to recruitment and selection, compensation management, career development
and employee motivation also have positive relationship with financial performance.
However, the innovative training and development practices have shown negative
relationship with the financial performance too. This negative relationship of training
and development practices has also been supported by earlier studies (Adnan et. al.,
2011).
Discriminant Analysis for Overall Employee Productivity
Discriminant equation for employee productivity is found to be as given below:
CONCLUSIONS AND RECOMMENDATIONS
167
Employee Productivity = 0.997 (Innovative Recruitment & Selection) -0.462 (Innovative
Training & Development) + 0.922 (Innovative Performance Management) +0.190
(Innovative Compensation Management) +0.265 (Innovative Career Development) +0.098
(Innovative Employee Motivation) + 0.091 (Innovative Employee Security) -7.260
The innovative Recruitment and Selection as well as Performance Management
Practices are showing the positive relationship. Performance appraisal was found to
be the significant predictor of organizational commitment and performance in a study
conducted by Shahnawaz and Juyal (2006). The innovative Compensation
Management, Career Development & Employee Motivation have also shown positive
relationship with the overall productivity. But, the innovative Training and
Development practices are again showing a negative relationship with the employee
productivity. Contrary to these results, a few studies have proved negative
relationship between employee productivity and recruitment and selection practices
(Dimba and K’Obonyo, 2009).
5.1.4 Challenging Areas of the Innovative HRM Where Banks Are Lagging Behind
Certain challenging aspects of the Indian banking sector have been also explored on
the basis of the responses of the employees of the banks under the study:
The major challenging area is that there is a need for exploring other new and
innovative HRM practices which are being followed in the MNCs and the other
domestic companies of India like Wipro, Reliance, Infosys, Arvind Mills, and TISCO
etc.
Other challenges which this sector needs to tackle are:
o Pressure on employees for fulfilling targets
o Less diversified recruitment and selection
o Less or unsatisfied amount of discounted loans to employees
o Less transparent HR information system
o Postings in very far areas
CONCLUSIONS AND RECOMMENDATIONS
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o Lack of faster promotions
o Less participation from the lower level employees
5.2 RECOMMENDATIONS
The banking sector is one of the major pillars of the Indian economy. No doubt the
level of implementation of these innovations may not be satisfactory, yet the
implementation has been started and the favourable results in the productivity will
make these banks feel how important these are for their growth. It has been found that
convergence of practices of new and innovative HR areas will benefit the banks to
become more competitive in the global market. Thus, all these innovative practices
are a must in this sector to move on in the dynamic business environment.
Results show that innovative motivation HR practices positively influence the
financial performance of the banks and employee productivity, but they are
implemented at the lowest level. So, the banking sector needs to redesign the
motivation practices more and more. Otherwise, it will be difficult to achieve the
targets of employees’ retention. The job information at the time of recruiting people
should be apt so that they can be put at the right place. Pitt and Ramaseshan (1995)
found that individuals who displayed a higher tendency to leave their jobs were those
who perceived that the job previews that they received during the interview process
were not realistic.
Moreover, the personal biasness and knowledge of the senior employees is the major
criteria for choosing the trainees till now in the banking sector. This needs to be
improved so that overall effectiveness of these practices can be improved.
Indian banks face a number of challenges, the most important being - to make the best
use of their existing human resources and compete on the basis of innovative HRM
practices. The public sector banks are lagging behind in the race of this
implementation. The public sector banks make a major contribution in the country’s
GDP. So they need to focus more and more on such innovations so that the employees
can concentrate on the performance rather that their HR issues.
CONCLUSIONS AND RECOMMENDATIONS
169
The private sector banks have been found to be following more innovations in the
performance management practices in comparison to the public sector banks. To
improve HR performances, public sector banks must apply innovative performance
management practices at a higher level.
Further, the security related issues also need to be focused more in the public sector
banks of India so that the employee can concentrate more on their performance.
In other countries like UK, USA, Nigeria etc., it has been widely claimed that HRM
practices adopted by private firms are now being applied in public sector also
(Farnham and Giles 1996; Storey 1992; Winchester and Bach 1995). The same
change is required in the Indian banking sector also so that the financial sector of the
economy can be strengthened.
Moreover, the banks need to face the challenging areas with the help of a few other
innovations in HRM just like use of management games, comfortable posting
provisions, diverse selection policies, more transparencies in the HR system, faster
promotions, participation from the lower managers, continuous and effective
training etc. The reason behind the adoption of other practices is that these companies
are using these innovations in India keeping in mind the changing business
environment of the country and global competition.
Besides this, a few innovative ideas should be welcomed from the already working
employees of these banks so that the actual implementation can be possible there. And
the practices, which are already being implemented in these banks, should be
practised at a higher level keeping in mind the present era of competition where you
cannot think of postponing things because of the concept of “if not now, then never”.
CONCLUSIONS AND RECOMMENDATIONS
170
5.3 SIGNIFICANCE OF THE STUDY
There are certain implications of the present study for the HR practitioners and the
management of these banks. First of all, new techniques in employee selection are helping
management find the right people to work in today's challenging banking environment.
Secondly, just finding good people is not enough. With technology and customer demands
changing continuously, management must continue to train and develop its people through
the new ways to keep a competitive edge. The findings of the study indicate that employee
productivity can be enhanced by the use of Innovative HRM Practices. These findings have
important lessons for banks as well as the other organisations by way of the seriousness of
their efforts towards HR system renewal. By empirically testing whether different innovative
HRM practices are associated with higher employee productivity, the present study adds to
academic knowledge by providing empirical evidence pointing towards the significance of
continuous renewal of HRM practices.
Moreover, the present study provides an understanding of the nature of innovative
HRM practices, whereas a gap exists in the earlier researches where these practices were not
analysed properly, especially in any service organisation like banks. In the Indian context,
evidence for a relationship between good HR practices and employee attitudes and
organizational effectiveness was largely anecdotal, coming from industry case presentations.
By promoting new HR practices, any organization provides the signal that its human
resources are worthy of the firm's investment, attention and time (Gilley, 2001).
5.4 LIMITATIONS AND SCOPE FOR FUTURE RESEARCH
The current study suffered from a number of limitations which represent opportunities
for future research. Firstly, the unmeasured exogenous variables may affect the relationships
we studied. For example, other innovative human resource practices, that have not been
studied, may also affect employee productivity. In addition to this, there might be other
measures of employee productivity in the banks. Therefore, in future researches, the other
innovative human resource practices and other measures of employee productivity
organizational factors can be simultaneously analysed.
CONCLUSIONS AND RECOMMENDATIONS
171
Second limitation is the static nature of the study, that is, the study is based on a one-
time view of certain aspects of the employee productivity of the banks rather than collection
of data over different periods of time. Thus, future researchers may collect the data at
different periods of time to determine more precisely the relationship between innovative
human resource management practices and employee productivity.
Another limitation of this study is that only subjective measures in the form of
perceptual responses of the employees have been used to find out the employee productivity.
Even the financial performance of these banks was measured using these responses only.
Another research can be carried out to cross verify these results on the basis of the absolute
employee productivity measures like per employee business of banks, deposits and advances,
NPAs etc.
One more area of scope for the future researchers is that they can carry on the similar
research in the other banks which have not been covered so far in this study. Foreign sector
banks can also be included for a broad comparison. Moreover, industry comparisons of
innovative human resource practices as well as their relationships with HR and financial
performance measures may yield important insights. The study could, however, be extended
cross culturally in order to have more generalized conclusions. Future research can be done
covering a wider area and more respondents with cross cultural extensions even across the
country. Researchers might also want to look at the differences, if any, in the adoption of
innovative HRM practices from developed and emerging market perspectives.