Serandib Bank

Introduction

This is the fourth assignment which I am forwarding as a case study for module 4 examination of Professional Qualification in Human Resource Management 75th Batch at the Institute of Personal Management Sri Lanka (IPM).

The case is about the SerendiB Bank which was playing a successful monopoly game in the Bankers field where only two other local banks were held due to the Government regulations towards the implementation of foreign banks in the country. The SerendiB Bank was leading the country with a staff of 9,800 at the branches operating in each leading town island wide. Very recently; on its 50th anniversary, a new chief executive officer, Mrs. Maya Perera was appointed on her post who was just returned back to the country after serving 20 years at two foreign Banks as a Top Executive.

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With the arrival of new CEO, many senior executives of the bank were unhappy with her new approach which is emphasized on followings. Cooperate vision and strategies/ businesses objectives for next five years Creating customer friendly process Introduction of latest technology Motivating internal staff through extrinsic motivation Promoting team work and achieving goals through team dynamics. The bank was delighting its success for next two years till the time of arriving two foreign banks and with that, suddenly it faced a narrow drop in all aspects.

The bank lost its customers by 50% and the employee turnover was 22%. Finally the bank has close down its 22 branches and divest it two overseas operations. Executive Summary SerendibB Bank was practicing the seniority based promotions, non-financial rewards for individual efforts and also staff enjoyed the traditional banking activities. But, new CEO emphasized the impotency of introduction of latest technology while motivating the staff through extrinsic motivation and promoting team work and achieving goals through team dynamism.

Also, CEO wanted to encourage people more towards the monetary rewards and as a result management introduced nearly a dozen of group incentives whilst statutory payments were paid in double over and above the legalized criteria. Although Bank achieved a higher growth rate in financial terms during the first two years tenure of new CEO, many senior executives were extremely unhappy with the CEO’s new approach. With launching of two new foreign banks, many senior staff members left from the SerendibB and joined with this new banks for better prospects and relieve with the newly introduce reward schemes.

Within first six months, SerendibB lost over 50% of customer base and also drop in revenue. Further, SerendibB had to close down 22 branches and divested two overseas operations. This case study demonstrates the employee reward systems can help organizations to achieve their goals. However, Employers must first identify each objective clearly before developing tangible and intangible reward systems. Important goals such as employee retention and job satisfaction, performance improvement and employee motivation can be achieved by identifying the desired outcome of employee reward programs. . Problem Statement 1. The newly introduced reward management system does not fit to the requirements of the employees in the organization. The effectiveness of reward package is impacted by internal and external factors and it is important for employers to continually monitor, evaluate and adjust their rewards and benefits packages to ensure that they continue to meet employees' needs. Changes in the competitive landscape, in the economy, in employee needs and in demographics can all impact how effectively existing packages meet employee needs.

Ongoing assessment of both internal drivers and external environmental impacts can help ensure that companies' reward packages serve to drive retention in a positive way. But, New CEO of SerendibB Has changed the existing reward management system without doing a proper study. Therefore, change of existing reward management system is not suitable to entire organization and its requirement.

The newly introduced

Reward Management system does not have the proper balance between the Financial and Non - Financial Rewards, individual and group rewards.

Financial rewards and group incentives are one way businesses can show their appreciation to employees for hard work and dedication, but this should be just one piece of the compensation system. Non-financial rewards and individual incentives can carry just as much weight by empowering employees, as well as giving them a sense of accomplishment and of belonging. CEO of this bank always promoted the monetary rewards and the team work concept among staff. Therefore, rewarding system should be balanced among financial and non-financial rewards as well as the Individual and the group incentives.

The Reward Management

System is not consistent and sustainability. Employee reward systems can help employers achieve their organizational goals. However, employers must first identify each objective clearly before developing tangible and intangible reward systems. New CEO had taken a decision to pay in double the EPF,ETF and gratuity over and above the legalized criteria. But he hasn’t checked whether the organization can afford such a huge expensein the future. At the same time legal consultants also advised the top management not to grant excessive financial rewards.

Therefore, such a reward managements system doesn’t have a sustainability, consistency and credibility

The Reward Management System does not catering the purpose

Employers must offer employee rewards that the company's employees find meaningful. Well-managed employee reward management system have tangible affirmative effects on the employer’s bottom line results such as Attraction, retention, motivation, engagement, return on investment. Throughout the case it doesn’t demonstrate the key values of reward management system.

Further, Majority of the staff of the SerendibB bank left and joined with new foreign bank due to frustration. In that case SerendibB was failed to full fill the basic requirement of the reward management system.

The Reward Management System does not cater the requirements of the existing staffWithinfirst six months of opening the competitor banks, SerendiB lost over 50% of customer base and had to face huge drop in revenue. Also, many of the senior staff members joined the new foreign banks. By that moment, top management of the SerendibB bank well knew the reason behind.

But, nobody take steps to change or enhance the existing rewarding system so that best fit for the existing employees and retain them with the SerendibB bank. Alternatives 1. SerendibBBank should come up with incentive plans as follows for their employees in order to reward staffs who contribute the most to the profitability goals of the bank. This allows employees to reap the rewards to their business acquisition activities and helps to promote a sense of self-achievement and teamwork.

• a) Bank need to identify those products and services that it wants to concentrate upon based on product demand, pricing and risk analysis. For example, when a bank decides that too much of its assets are related to the condominium market, a shift toward other income producing real estate is made. Once the current year product and profitability goals are established, the various departments of the bank are informed of the products that the bank is going to pursue.
• b) It is recommended consult with staff and trade union and gets their ideas of a new incentive system. Also, management can conduct brief survey to get the ideas of staff. Provide clear choices in survey in order to get clear answers. Ask questions like "Would you prefer a cash reward or a personalized plaque for being employee of the month? " Employee surveys should also list a variety of monetary and non-monetary awards and ask employees to list their preferences.
• c) A bank profitability system takes each product that the bank offers and classifies it according to the responsible department and customer account. The various customer accounts are assigned to specific employee who manage the account and increase the business volume of the bank with the customer. The employees also acquire new customer accounts that generate profit. Therefore, a proper profitability system must be capable of tracking the progress of existing and new customer accounts by employee in order to reward the efforts of the employee through the incentive program of the bank
• d) Once the various income-producing goals are established for the bank, the acquisition incentive program is communicated to the departments involved. For example, if incentive payments are being offered for acquiring new real estate business loans, the program details what the employee needs to do in order to earn an incentive payment. The typical program involves the payment of an upfront fee to the employee of two percent for the original acquisition of new business and a five percent payment after the first year of operation from the ongoing business of the customer. This type of program tends to bring the operation of the bank together
• e) The continual monitoring of the profit and loss goals of the bank according to customer and assigned employee must be transparent and available to the relevant employee, as well as to the department supervisor. This allows for total follow-up and monetary remuneration. It also shows where adjustments need to be made due to problematic relationships. Furthermore, it provides the historical base for progress and motivation.
• f) Measure employee satisfaction of new or improved incentive plan by obtaining ideas of employees or implementing a survey and review exit interview information. In addition, analyze turnover rates before and after implementing the employee incentive program to measure the effectiveness of the new or improved rewards system.

Monetary incentives encourage employee compliance, rather than encouraging risk-taking, since most monetary rewards consider only employee performance.

Employees may be motivated to perform in certain ways to achieve monetary rewards, rather than doing something because it is the right thing to do. This behavior can disrupt or end good working relationships among associates, since they have become competitors rather than co-workers, which ultimately disrupts the overall work environment. Non-monetary incentives have been used to reward employees for their good work by providing opportunities for training, flexible work schedules, improved work environments and sabbaticals.

Therefore it is essential to take a good balance between non-monetary and monetary incentives as well as the group and individual incentives. Because it results in a more satisfying program to address the diverse interests and needs of employees. 3. With the lost of customer base, SerendibB bank is in a terrible finance situation. Bank is still paying the statutory payments in double to existing employees due to wrong decision taken by its CEO. Therefore, it is necessary to immediately stop such extra payment (EPF,ETF; Gratuity)done by the bank to its employees and on behalf of employees. . SerendibB Bank need effective reward systems in order to attract employees to the bank keep their existing employees and maintain a satisfied workforce. The primary employee reward is usually pay. But, SerendibB has to offer a total reward system that includes good pay and other non-monetary incentives. Designing a total reward system is important task to be done by the bank to overcome the current problem it has faced. Therefore, bank can implement following to attract external people. a) Develop a competitive pay strategy.

Benchmark (two foreign banks) the market pay scale for each compensated position in the organization. Once pay scales are determined, Deputy CEO can decide which positions should be paid at, below or above the average pay rate. Critical positions in the organization are often paid at higher rates to keep valuable employees and avoid wasting resources on employee searches. b) Establish work-life rewards. These rewards include paid or unpaid sick time, paid lunch and break times, childcare assistance, variable work schedules and other benefits that don't normally include pay, but are seen as valuable by employees.

Organizations that are in a position that precludes paying traditional benefits can sometimes keep employees by offering these types of rewards c) Develop meaningful employee recognition programs. Many employees respond to simple recognition for a job well done. This can be as easy and spontaneous as a simple "thank you" or more organized as a monthly or quarterly recognition lunch or dinner. It's important that people who are recognized are truly outstanding workers. Depending on the profitability of the organization employees be recognized with anything from cash to event tickets to a certificate. ) Initiate a career development program. Many employees will stay at organizations that offer fewer benefits if they can see that there is possible job advancement available in the future. Offering management training programs that truly given employee a leg up on future career advancement can be viewed as a valuable reward. This can be a very low-cost reward system that keeps employees for the long-term. It's important to only offer training to employees who truly deserve it. 5. At this crucial time, it is important to retain existing employees.

Therefore it is requires to offer them a short tem rewards such as meal allowances, bonuses, transport allowances, health and life insurance, and annual vacation in order to keep employees. Conclusion Most people work mainly or even exclusively for the money they earn. No employee refuses more money, whether it is a one-time reward or a permanent pay increase, but employee rewards need not always be monetary. Raises and bonuses are among the most potent workplace rewards. The importance of rewards in the workplace extends beyond providing increased pay.

Therefore, it is important to starta proper reward system in the bank with the aim of getting below results to the SerendibB bank and overcomeexisting problems which bank is experienced now.

Staff Retention

Staff turnover is expensive. It costs a company from 120 to 200 percent of an employee's annual salary to replace him when he leaves. New hires often require considerable time to reach peak performance. Staffs who feel that the bank recognizes their efforts are less likely to seek jobs elsewhere than those who feel that they are taken for granted. Maintaining Morale

At this moment staffs of SerendibBsuffer from low morale. This is especially due to unhappy with CEOs new approach towards the reward system. Providing rewards can boost morale and need not be much costly. Enhancing Performance Rewarding employees often improves performance on the job. Nonmonetary rewards often produce surprisingly sustained increases in staff productivity. Raises and bonuses also increase staff productivity. "Carrot" Versus "Stick" Motivation Bank staff is consisted with educated employees. Taking a "stick" approach to bank discipline is often counterproductive in motivating staff.

Punishments, in the form of negative public recognition, can quickly disintegrate into a finger-pointing exercise among employees eager to keep the spotlight away from themselves. Therefore, it is very vital to have a effective rewarding system in SerendibB bank to speed up the recruitment process and as well as to retain the existing staff .

Implementation

Implementing an employee reward program is a great way to push workers to excel. Not only does a program generate results for the people who win awards, but it also tends to increase productivity and drive staff to give their most to the SerendibB Bank.

Therefore, it is recommended to consider the below given areas when implementing and employee reward program to the SerendibB Bank. Director HR should take an initiative to implement a reward policy for the Bank so that it would be clear to the bank staff. Also, bank need to initiate a grievance handling system, so that staff can come up with any problem they have and look for a solution. If such is available staff might wait and see whether they can have solution before they go for drastic actions such as leaving form the bank

Create two lists of goals, one for the bank and one for the staff. Be clear on what the staff are expected to do within the program and what bank want to achieve by creating it. Increasing customers, improving staff morale or rewarding hard staff are all acceptable goals, as long as bankis clear on them. Decide on the type of prize that will be awarded. Prizes can be symbolic (an actual certificate or medal) or they can be material and focus on money rewards, special items or long-term rewards, such as more time off or a raise. Announce the timing of the reward system.

It doesn't really matter bank plan on handing out awards on a monthly or quarterly basis, but it has to plan in advance. Management of SerendibBlet the staff know what to expect and when. Once announce the program, HR department of the bank can do updates throughout the month or quarter to show where the process is going and how everybody involved is doing. Designate a leader to keep track of the system. This could be a manager, a staff who is not participating in the program. Create a schedule or a follow-up system so bank staff can track themselves and make the process easier for the leader..

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