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CONCLUSIONS AND RECOMMENDATIONS

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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.


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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


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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


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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


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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.


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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.


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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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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


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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.


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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,


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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:


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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


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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.


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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”.


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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.


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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.

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