Public Sector Banks - More Bang for the Buck?
Other Non-Monetary Rewards
In addition to the benefits which can be valued in monetary terms, public sector banks provide several nonmonetary relational rewards which are uniquely different from the private sector. Four such non-monetary rewards have been detailed out to emphasize their significance in Total Rewards for a public sector bank employee: Job Security: Other than on disciplinary grounds, public sector banks have virtually zero involuntary attrition. Compared to 4.5% of involuntary attrition in private banks, job security stands out as a significant non-monetary reward. This policy of job security remained unchanged for public sector banks even at the height of the financial crisis in 2009-10. The private sector, on the other hand, saw 13% of the organizations implementing a headcount reduction.
Rotation: Imagine a career trail where a bank employee gets to hone his or her skills through stints across foreign exchange, treasury, retail and corporate operations, with experience of working across all zones in India as well as a stint in New York. Sounds tough to implement? Add to that a stint in new business development, as a head of a subsidiary and as a CFO and you will have a well-rounded banker ready for the top role. This indeed is the career trail of current CMD of a leading public sector bank. Interestingly, such career paths at public sector banks are more of norms than exceptions. In fact, job rotation policy has been institutionalized as a part of career progression, by making certain rotations mandatory for promotions beyond a particular level. Such a policy on job rotation leaves an employee richer both in terms of capability and experience. Training: Frequent role changes on account of rotation necessitate role-based training in public sector banks. Coupled with behavioral trainings, these courses account for significant non-monetary people investments. A leading public sector bank, for instance, provided training to over 60% of its officer population in the previous fiscal.
Work-life Balance: Public sector banks clearly trump ntheir private peers on this count. Further, they offer a mmore liberal leave policy as compared to their private mpeers, especially when accruals and caps are compared
Summary List of Benefits
Advantages of Distinct Pay Practices
People advantages of benefits and non-monetary rewards are visible. Compared to cash, they are more difficult to replicate and match by the competition. Further, some lifestyle benefits like club membership or staff quarters in prime locations are difficult to 'cash out'. Also, nonmonetary benefits prevalent in public sector banks like liberal leave policy and job security help create a sense of belonging. It may be argued that benefits, though desirable, may not be the most cost-effective way of delivering compensation. Three illustrations show that benefits can actually help lower costs for the employer:
Cost Advantages of Distinct Pay Practices
The Scale Advantage: As mass employers, bank can procure/administer benefits for the employees at a fraction of a cost that the employee would have to pay as an individual. E.g. Holiday homes: The annual cost of operating holiday homes for one public sector bank is less than 1,500 per eligible employee. A private holiday resort membership for an individual would cost a significant upfront amount in addition to annual charges. The Increment Advantage: A Total Rewards structure leaning more on non-monetary rewards ensures that the total cost to company increases at a rate slower than cash increments. This is because spends on non-monetary rewards need to go up by the same amount. E.g. It is quite possible that premium per employee actually falls in the next year instead of growing at a rate of increment. Similarly, it is quite possible that spend per employee on training falls in the next year on account of greater use of technology.
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