The Emergence of HRM as a Driver of Success in banking sector

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The banking sector plays a crucial role in the economic development of any nation, and its importance is especially significant in developing countries like ours. Globally, banking activities are rapidly diversifying. To stay competitive, banks must focus on developing their human resources. Human resource development is vital for organizations to make the most of their workforce and requires the involvement of both parties to mutually benefit and achieve organizational goals. ( L.Srinivas and Dr. G.V. Chalam, 2006)

Trends of HR in banking sector

In a rapid development in technology, customer expectations changes and regulatory adjustments take place, the banking industry continues to evolve. These developments have also transformed HR practices within the sector. The following trends are currently influencing HR in banking.

  Adopting a digital transformation approach:

HR departments in the banking sector have also felt the effects of digital transformation. By leveraging technology, HR professionals are improving efficiency and simplifying processes. Employees will have access to information through self-service portals, and HR tasks can be managed using cloud-based HR systems.

2.     Focus on employee well-being:

High-pressure work environments are typical in the banking industry. HR departments understand the need to support employees' mental and physical well-being. They are promoting work-life balance, offering mental health resources, and encouraging open communication to address employee concerns. HR professionals are also fostering a supportive and inclusive culture to enhance employee engagement and resilience.

3.     Enhanced Data Analytics:

Banks are increasingly turning to data analytics for informed decision-making. In HR, data analysis on employee performance, engagement, turnover rates, and talent acquisition helps identify trends and patterns. By using data analytics, they can make evidence-based decisions in talent management and succession planning, identify skill gaps, and develop strategies to enhance retention.

4.     Up skilling and Reskilling:

With technological advancements, the banking industry is experiencing a growing need for new skills. This shift is prompting HR departments to focus on up skilling and reskilling their employees. Training programs on emerging technologies are being introduced, continuous learning is encouraged through online platforms, and employees are motivated to take charge of their own professional growth. Consequently, employees will acquire the skills necessary to succeed in the digital era and stay competitive in their industries.

5.     Diversity and Inclusion:

Recently, the banking industry has placed a greater emphasis on diversity and inclusion. HRM plays a crucial role in fostering an inclusive workplace. Beyond ensuring fair recruitment and selection, HR professionals work to provide equal career advancement opportunities for individuals from varied backgrounds. By promoting a diverse and inclusive workforce, HRM can improve employee satisfaction and drive innovation and better decision-making within the organization.

6.     A change management approach:

Advancements in technology, market fluctuations, and regulatory changes are common challenges in the banking industry. HRM supports organizations in managing these changes effectively by implementing robust change management strategies. HR professionals communicate changes to employees, offer training and support for adapting to new processes and systems, and address any resistance or concerns. By proactively managing change, HRM helps organizations maintain agility and resilience in the face of industry disruptions.

7.     Performance Management with Agile Methodologies:

Agile methods are taking over traditional performance management systems, with annual performance reviews being replaced by ongoing feedback and coaching in HR departments. This approach allows for real-time performance discussions, goal setting, and adjustments. The emphasis is on enhancing performance, identifying development opportunities, and aligning individual objectives with organizational goals through regular communication between managers and employees.

Conclusion

HRM has a multifaceted role in the ever-changing banking industry. HR professionals contribute to the growth and stability of financial institutions through talent acquisition, retention, performance management, diversity and inclusion, and change management. As HRM adapts to emerging trends and challenges, it will continue to evolve and remain a crucial component of the banking industry.

References

• L.Srinivas and Dr.G.V.Chalam (2006) 'Banking sector and human resources (changing scenario)',journal of human resources,68(5), pp 48-54
• J.Shifa Fathima (2015) 'Human resource management in banking sector',journal of human resources,57(2),pp114-120
• Talentpro people solutions (2024) 'HR and banking industry in 2024' Available at: https://www.talentproindia.com/2024/05/03/hr-and-banking-industry-in-2024/ (Accessed on 12/08/2024)
• Shashank vagale (2023) 'Role of HRM in the banking and finance industries in 2023' available at: https://multirecruit.com/role-of-hrm-in-the-banking-and-finance-industry/ (Accessed on 08/08/2024)