Talent Management in the banking industry

 

In today's competitive environment, talent management in the banking sector serves as a strategic tool for achieving a competitive advantage. The workforce is likely to drive future advancements in the banking industry, making efficient talent management crucial for these organizations. As a result, HR’s role will become more dynamic and strategic than ever before. A comprehensive, modular, and customizable HRMS platform can be a valuable asset for the HR department within the banking sector. (Shreya Srivastava, 2022)

In a swiftly changing financial environment, especially in banking sector, talent management has become crucial for achieving sustainable growth and maintaining a competitive edge. As banks adapt to economic shifts, technological advancements, and regulatory updates, the ability to attract, nurture, and retain talented professionals is more essential than ever. (Hailu berhanu, 2024)

This blog will illustrate the talent management process, challenges and opportunities related to talent management in this dynamic environment.

Talent management models

Figure 1 : Talent Management process model

 

1.    Planning: As with any process aiming for a specific outcome, planning is the initial step in talent management. This stage includes identifying existing gaps in human capital, creating job descriptions for crucial roles to direct sourcing and selection, and devising a workforce plan for recruitment efforts.

2.      Attracting: Following the planning phase, the next step is to determine whether to address talent needs internally or externally. This involves drawing a steady stream of applicants, whether through job portals, social networks, or referrals. Identifying the necessary talent pools beforehand helps streamline and enhance the efficiency of the process. The strength of the organization's employer brand plays a crucial role here, as it influences the quality of applications received.

       Selecting: This step involves employing a series of assessments to identify the best fit for the role and the organization. This includes written tests, interviews, group discussions, and psychometric evaluations, along with a thorough review of the candidate's public information. Modern tools, including software and AI-powered solutions, can help recruiters sift through numerous resumes to pinpoint the most suitable candidates and find the perfect match.

4.     Developing: Many organizations today prioritize hiring based on attitude and then training for skills. This approach is effective because it focuses on the individual rather than just their resume. By investing in employee development, organizations not only help staff grow with the company but also foster loyalty and boost engagement. This process starts with a robust onboarding program to integrate new hires into their roles. It continues with opportunities for skill enhancement, including counseling, coaching, mentoring, and job rotation, to support ongoing professional growth and contribution to business success.

5.     Retaining: To ensure long-term success, it's essential for organizations to effectively retain their top talent. Many companies achieve this by offering promotions and salary increases, providing growth opportunities, involving employees in special projects and decision-making processes, offering training for advanced roles, and implementing rewards and recognition programs.

6.  Transitioning: Successful talent management emphasizes the collective transformation and development of the organization through individual employee growth. This involves ensuring that each employee feels connected to a larger purpose. Offering retirement benefits, conducting exit interviews, and implementing effective succession planning may appear to be distinct career milestones, but they all serve as transition tools that support the organization's shared journey.

Figure 2 : 8 steps of the talent management process

Figure 3 : Talent management model

Talent Management practices in banking

Planning for Future-Ready Banking Recruitment

In today’s competitive talent market, future proofing recruitment is crucial. Traditional methods may no longer suffice, so banks need to explore new strategies for attracting and retaining talent. Embracing global advancements, especially in Information Technology and Human Resource Management, is key.

Building a Talent Pipeline

The skills required for modern and digital banking differ significantly from those needed for traditional banking, particularly at higher management levels. Therefore, banks must implement a multifaceted talent acquisition and development strategy.

Streamlining Succession Planning

An effective talent management program should integrate succession planning for mid-level and senior management. This process involves identifying critical roles, evaluating high-potential employees, mapping them to these roles, and developing succession plans based on retention and availability.

Emphasizing Inclusion and Diversity

Diversity enhances financial performance, decision-making, job satisfaction, and corporate image. Banks should set measurable diversity goals and assess their procedures for unconscious biases. A focus on diversity and inclusion fosters a flexible work environment, broadens the recruitment pool, and promotes better decision-making and creativity.

Ensuring Effective Performance Management

Effective performance management is vital for improving operational efficiency in banking. Banks should focus on maximizing employee engagement and development through performance management, rewards, and recognition programs. Building a performance management approach that emphasizes regular feedback, differentiates between high and low performers, and supports workforce development will enhance overall performance.

Designing Agile Organizational Structures

Traditional banking models must evolve to be more dynamic in order to adapt to changing conditions. Moving from rigid hierarchical structures to agile organizational frameworks allows banks to empower teams to achieve goals flexibly. In an agile setup, teams can adapt and reconfigure as new opportunities arise. This approach offers several benefits, including reduced costs, improved customer satisfaction, and higher employee engagement.

Leveraging Data for Talent Management

The digital era provides banks with vast amounts of data that can be used for more informed talent management decisions. Progressive banks can harness this data to enhance recruitment, retention, motivation, and promotion processes, moving away from subjective practices. For example, data can be used to create heat maps highlighting roles with high turnover rates, allowing banks to focus on improving engagement, training, and motivation for those positions.

Enhancing Employee Retention Strategies

Employee retention remains a significant challenge in the Indian banking sector, with common issues including:

• Negative perceptions of compensation
• Limited career advancement opportunities
• Poor communication during organizational changes

A strong retention strategy can help reduce turnover, save costs, and boost morale and productivity. Effective strategies typically include:

• Methods for maintaining employee engagement
• Practices to foster inclusive communication
• Techniques for implementing rewards and recognition programs effectively

Cultivating a Culture of Employee Engagement

Research indicates that only 35% of employees report high levels of engagement. Developing a culture that prioritizes engagement can improve employee satisfaction and positively impact business outcomes. Engaged employees perform better and contribute more effectively to achieving strategic goals. Therefore, engagement should be embedded in the organizational culture and regularly evaluated to meet employee expectations.

Developing a Competency Framework

Organizations need to continuously invest in their employees' skill development. A competency framework outlines the skills and standards required for various roles within the organization. This framework helps evaluate employee performance and can serve as a basis for training and career development programs. For example, a framework might define the competencies needed for progressing from "managing self" to "managing others" and then "managing managers."

Planning for up skilling and Reskilling

To keep pace with industry changes, employees must continually update their knowledge, skills, and attitudes. Up skilling and reskilling strategies should focus on current demands, shifting from traditional skill-building to areas such as Design Thinking, Innovation, and Creativity-led Entrepreneurship (D.I.C.E.), as well as soft skills. An adaptable up skilling and reskilling plan can help employees stay relevant amidst disruptions and enhance process efficiency.

Promoting a Progressive Work Culture

Baseline compensation alone is insufficient for retaining talent in today's environment. Employees seek challenging work, agile teams, and a sense of purpose. Cultivating a culture that values lifelong learning, supports mental health, and emphasizes safety and motivation is crucial for attracting and retaining top talent. Additionally, incorporating Environmental, Social, and Governance (ESG) policies can align with employees' growing awareness of corporate responsibility towards environmental and social issues.

Talent Management Strategy

• Prioritize Workplace Culture: Creating a supportive and inclusive environment leads to greater employee satisfaction, higher contribution, and longer tenure.
• Offer Growth Opportunities: Most employees seek career advancement and are likely to leave if they don’t see clear paths for progression and receive adequate support.
• Leverage Employee Strengths: Identifying and utilizing each employee’s unique skills and strengths for appropriate roles enhances both engagement and productivity.
• Ensure Fair Compensation: To attract and retain top talent, employers need up-to-date compensation benchmarks relevant to their industry and region.
• Promote Diversity: Embracing a diverse workforce brings varied perspectives, fosters innovative problem-solving, and reflects the community the organization serves.

References 

Kavita rani and Diksha garg (2014): A study on training and development in public sector banks, International journal of management and social science research, pp 2319-2348

Unnar Teodorsson, Thorhallur Guldlaugsson and Svala Guldlaugsson (2022): Talent Management in the Banking Sector: A Systematic Literature Review, Administrative Sciences 12(2), pp 17-29

Subhransu gupta and Hauyang b zala (2021) : Talent management in the emerging banking scenario; The journal of Indian institute of banking and finance pp 32-48

Darwinbox [Online] Available at : https://blog.darwinbox.com/talent-management-in-banking-2024 Accessed on 14/08/2024

What is Talent Management? Definition, Strategy, Process and Models [Online] Available at : https://www.spiceworks.com/hr/talent-management/articles/what-is-talent-management/