Tuesday, February 2, 2010

IDBI Bank gets variable pay surprise

Only public sector player to have performance-linked salary.

Ignoring a government advisory, IDBI Bank has moved to a variable pay structure for its officers, who will now have a 70 per cent fixed salary component.

In the process, it has become the first public sector bank to shift to this structure, while the other banks, that are part of a negotiated wage structure, gave up the plan in the wake of opposition from employee unions.

The move came as a surprise for most IDBI Bank managers, who discovered the shift only after they received their salary for January. The government has also set up a committee, headed by former Bank of Baroda Chairman and Managing Director A K Khandelwal, to review the human resource policies of public sector banks and variable pay is one of the issues being discussed.

The bank has also raised salaries around 20 per cent, three bank executives said.

While IDBI Bank Executive Director (Human Resources) Pramod Sadar Joshi confirmed the variable pay package had been implemented, he did not respond to an e-mailed questionnaire. An IDBI Bank spokesperson said Joshi was tied up with meetings.

Executives said they were surprised the bank had gone ahead and implemented the move, since there was no mechanism in place to measure their performance.

Also, last May the government had written to IDBI Bank to put on hold plans to shift to variable pay and harmonised service conditions, saying the proposals required closer examination. Bank workmen had got a stay, following an intervention by the labour commissioner. Following this, the bank had put its plan to implement a variable pay structure on hold.

IDBI Bank wanted to shift to a uniform pay structure as it had merged three entities to form the present bank. While IDBI, the development financial institution was converted into a bank seven years ago, IDBI Bank and United Western Bank were merged into the new entity. Each entity had a different set of service rules and salary structure and the bank management was trying to harmonise these.

At least two bank executives said the revised salary scheme had been implemented with retrospective effect and the bank would pay arrears over the next few days.

Source : Business Standard.


Kundan said...

Its the welcome step and go a long way in public sector bank history. This will also help these public sector counterparts in retaining the officers from moving towards pvt. sector.All other banks have to fall in line, the only factor is time. Lets welcome this first move forward to reward performance in public sector bank.

chandan said...

It seems that Mr Kundan does not have much depth on Public Sector concept.

Bank said...

This is a welcome step,however enablers to measure the performance of individuals working in different departments shall be put in place,otherwise it may become a huge hunting ground for chamchas.A Balance score card be put in place for all functionaries whether in deposits,advances,Treasury,marketing ,Back Offices,Regional Offices and Head Offices & an automated tracking system needs to be in place.
The Public sector has to align to the Market realities of to day by differentiating donkeys from Horses.
The system needs to be un biased.
A good beginning is made and let us see how it works.

vatsala said...

dear mr.kundan and bank .,
i think you are siding a wrong idealogy of the Govt. of india. Divide and rule Policy / we are still on the developing country side / we cannot have a free fall like what had happened in USA rather our economy cannot withstand the pressure.as most of the indians are below world earning rate .

adhitya said...

Dear Mr Chandan
I am going through your articles from last week. But i concluded is that you are having the old mind set of union leaders that is still prevailing in our employees union. Mr Kundan Rightly said that this is a welcome move by IDBI Bank. U are talking about divide and rule policy of GOI. But just let me know but we have got even after following our unions. I know u will find it tough to say because u at your own dont know the basic conditions of an average Bank employee like me.
Let me tell u what i am facing:-
I am an MBA and I spent around 12 hours in my Branch,
I dont have any staff support.
I daily face alot of problems and risks.
The risk- that every bank employee is facing. which the union leadrers cannt even realize.
My family life though newly started have become a nightmare.
I dont have time for that and thanks to my unions Fools, I dont have money for them.
I can still recall that I was University topper, and i face ashamed that my salary is lowest among my class mates, who have even found it tough to become clerk in the bank and somehow become Army Officer.
So tell me whats wrong in aspiring respectable salary.
even if it is Govts' divide and rule policy it is acceptable..
But please Mr Chandan dont impose your old mindset on us.

Sanjay Bhatt said...

Dear Aditya
Sorry But As per your comment to Chandan.

It is not the old mind set but its the experience.I feel your pain and understand also.Then I can not hold myself and as a senior I give you advise that If you are very tellented and MBA university topper then don't stay here.Dear friend I have also passed from you.Please left the bank and settled in another field where you can enjoy and be safe.
Nothing wrong in aspiring respectable salary,But dear You and Me are not alone in Bank Industry There are 10 lacs Employees make it.In our Banking Industry I am with age 36 and you like 24 or 25(I think) But don't forgete with age of 50,52,55,57 fellows also working with us and they are pillar of our industry.

Don't take it other way.I can't hold myself then write for you.


Rakesh Kumar said...

Dear Chandan Sir and Shri Bhatt

I also agree with Kundan Sir to some extent that it is a good beginning. We do need performance measurement matrix in place to measure the performance of each and every individual employee based on their respective KRA and Performance on those aspects. Once it is fixed i do not see any problem with the system. Bhatt sir seems to have some apprehension about Sr people ( in respect of age) , however i do not understand the basic of your assumption that Sr people cannot perform like juniors. I am 32 ,(CAIIB/DBF/Financial planning from FPSB, presently doing my MBA from correspondence and even today i have seniors in my office who performs better than me. There is absolutely no reason to believe that a 57 year old employee cannot work like 25. Yes computer skills may become a differentiation to some extent, but we in banks do not need to be a computer expert.I, therefore feel that the apprehension is no more valid in today and we need to change our mindset with time to keep the industry open for talented.The comment/advice of Sanjay Bhatt to Kundans post about leaving the job, settling else be safe and enjoy, is therefore cannot be appreciated. Perceptions are perceptions and are neither right or wrong. One do not have any right to critise others perceptions especially when they are not trying to influence others perception forcibly.

Bank said...

To all detractors of this ideology.Even after remaining together with our great union leaders,where we are
1.relegated to the lowest level in terms of earning.
2.Union signed scrapping of compasionate appointment and now fighting for it to shed crocodile tears.
3.All employees opting for pension were misguided with some hefty projections and ruined the 9th Bipartite.

In nut shell they create problems and befool the employees.Whatever IBA wants ,get it done without moving a millimeter.If you look at the provisions made by various Banks since 31.03.2008,it is within the range of 15 to 17%.This proves the drama played by Union/IBA.
In our view Union will not be able stop outsourcing/PLI etc. and will not trade it for Higher salaries.

PLI is a right step provided unbiased Performance Management System is in place.

Kundan said...

I think the comments on this blog itself tell the whole story.The so called old hardlines will find it difficult to accept, (and thats true for every change). But I still am firm believer that despite its all shortcoming this only can help the banks in retaining the talent. Otherwise only the left out who will not be accepted any where will remain here to mourn for the sad demise of our publisc sector banking structure. So lets accept the truth and welcome this first welcome move. Of course we should try for enablers for this like unbiased performance measurement system and appraisal system. Given the strong flexibility shown by banks and bank employees in accepting the changes like computerisation (which also was oppsed tooth and nail by the same union people), networking, we will surely accept this challenge also and excel.

Sanjay Bhatt said...

Dear Rakeshkumarji,
Good Evening.
Sir, I am not critising anybudy.Sir I am not trying to prove anything.Dear Rakeshji all our oldage fellows have no degrees like you(CAIIB/DBF/Financial planning from FPSB etc).Mostly with upto metric(10th or 12th).I agreed They can work like us.Now in competition time they may be suffer from variouse site.I have Computer skill then I am not believed that only computer knowledge is important and marketing skill has no value.If any guy has marketing skill and he canvase 20 Insurance policy but he don't know how to enter all datas in system,Then WHAT ? Today banks are going for various type of business like deposit,lendind,gold coin selling,insurace,demat and trading,etc...etc.Then How can our oldage fellows saw their performance and get needful salary.

Dear at your end you are senior with 32 years age but at other places not a same condition.It may be possible you have CAIIB/DBF/Financial planning from FPSB degrees and your bank or branch head will give you clearing department or ATM/internet banking or despatche work then How will you perform with your degrees.
I am not selfish.performance base salry is o.k for me and you.But We should be think about for others.Bank means not me or you,but more then 10 lacs bankmen.As per your sentence"Perceptions are perceptions and are neither right or wrong. One do not have any right to critise others perceptions especially when they are not trying to influence others perception forcibly".I am not critisising anybudy,I have only advised Mr.Adithya not Kundan as per my experience.Dear I have only gave advise not issued DO letter or MEMO.Here I or anybudy can only put or written their viewes,Nobudy can force to anybudy for do this or that.You are written Kundan instead of Adithya thats prove that your have not carefully read and understand and jump for favour or denied.Here all We are free for expressed our viewes.Dear don't feel bad,I am sure in coming days you will see that bank will selling wheat,rise,maize,soap,hair oil etc.It will may be wonder for you but not for me.May be possible I will posted for godownkeeper and you will posted for billing counter.

Above mention are only my viewes,
It may be wrong,because my education is only double graduate(Bsc & BA)and I have recently applied for JAIIB.

After 18 years of service I have no guts How to canvas CASA/Term deposit,Life Insurance policies,How to sold Gold coines,How to get High limits CC,Housing loans,How to open more and more Demat Accounts,How to convince customer,How to sold third party products.I don't know What is SME ? Then I am fearing and oppose,Its not true.I am doing everything over mentioned at my branch.But truth is always truth in any condition any time.
O.K You are right.

chandan said...

Without realising our socio economic status, the comments posted in favour of the move is quite immatured and definitely, found no place in the circle of think tankers of our country. It is experienced that delivering some sort of comment by someone at the age bracket of 25 to 35 may not be possible at the age of 50 onwards. Juniors should not be at off sight, that after twenty years they will be also seniors and at that time may not be ready to accept these type of developments.

In India there is no mechanism in true sense is possible to identify 'Non Performing Employees'. Only nepotism and favoritism will be there if such type of structure is introduced enmass.


chandan said...

Referring adhitya 2, 2010 10:31 PM:


"But i concluded is that you are having the old mind set of union leaders that is still prevailing in our employees union"


"Old wood best to burn, old wine to drink, old friends to trust, and old authors to read"


'I can still recall that I was University topper'

Surprised! This is just a loss of talent. No day this industry will recognised your this talent. You also can't change the system overnight. It is only a craze here to join for these young talented chaps.Very very sorry to know.


IYER said...

My dear friends,
There has been threadbare discussions on this subject - mostly emotionally driven for the reason that the persons concerned have for one reason or the other (presumably on justifiable grounds)assumed for or against the concept of PLP(productivity linked pay) or you call it VP (variable pay. I would like to dwelve deep into the issue and as such at the very outset I would beg your patience and a sincere reading of my views.

Let us see the Plus sides of PLP:- It acts as an tool to reward good work done by the people.
It justifies ones overstay and endeavours on extended hours and even on holidays - for which most of us are quite used to now without any return!
In fact, even our family members who are presently averse and distressed would start encouraging to be pro active and do more for the bank!
It will make the lazy guys invigorated to give their 100% and lacklusture attitude would become a past trend in banking!
In the process, every one would tend to learn all the facets of banking and wouldbecome a value added human resource for the bank and would be able to climb the ladder without any phobia of performance!
And of course, our leaders would no longer be cursed by the unsatisfied members and in fact there will be no roles for them to pay.

No doubt the institution would floruish well and become efficient enough to start paying you even higher emoluments with decent hike in both FP AND PLP in the days to come.
It all sounds musical and looks like a dream comes true! No doubt on these plus points. !

IYER said...


Then why there is nervousness amongst the oldies? Are they totally wrong? for understanding their quite justifiable fears, we have to look into the ground reality.

For achieving this breakthrough, we should have a foolproof, transparant and equitable module through which right matrix can be attributed to each type of performance by various levels of people in the banking industry. I know, even in IDBI Bank there is no module through which ones performance can be guaged.

Banking is known for its complex functionings and everybody's performance on all days can not be gauged in monetary terms to arrive at the value of employee like the way it is being done by PE fund managers and M&A companies who cough out hefty bonuses to their winning employees.

I uttered the word "on all days", because none of us are able to feel the satisfaction of delivering on all days and on all terms/postings. When I handled large proposals (new) amounting to more than Rs.1560 crores and innumerous renewal ones over a period of 8 months, I too felt and longed to receive some incentive - rightfully comparing myself with my colleague who was simply attending to routine work. But now in my present place of posting, inspite of my endeavours and handling more than 2000 crores worth proposals none could see light over a period of 18 months! Notwithstanding the fact that still I am monitoring a portfolio of over Rs.500 crores, would anybody treat me on par with my own early performance? But you see I had in fact put in more efforts on the failed ones? How to measure and reward this?

The worst thing and in fact the most shameful thing happening for ages in the banking - particularly in PSBs is that almost 25 - 30% of staff members do 100% of job when others enjoy life. When you are doing the other man's job, what justice you will be able to do to your part of job and still be able to earn PLP? See for in other institutions like Scope International you are assigned with a defined job where no body else can have a slice or the other. You have to deliver. Probably because of this 'doing the otherman's job', under the pretext of 'sharing the comrade's burden', for ages has been the singlemost reason for all the maladies we are now subjected to.

Our managements have never been able to be unbiased, there has been no transparent, employee friendly and motivating HR policy in place in any bank so far and there is dreaded vulnerability on officers which of late has been killing more people than any other diesease.
And now we see lot of strain in the relationship of general members and thew leaders!

If we can effectively answer these questions and be able to put in place a foolproof module to guage the performance of employees then the PLP will really do wonders!

Now let us discuss on the ways and means for that my dear friends

adhitya said...
This comment has been removed by the author.
adhitya said...


"Old wood best to burn, old wine to drink, old friends to trust, and old authors to read"

Surprised! This is just a loss of talent. No day this industry will recognised your this talent. You also can't change the system overnight. It is only a craze here to join for these young talented chaps.Very very sorry to know.

Final Conclusion:
Not surprizzzzed to see these kind of remarks..
Because Its what we people in Bank facing- the Sarcastics ramarks from the people of these type.

Every thing is quite clear from your quotes and Observations. this is same Mind set again.
Sorry Dear

PM said...

Ref:Mr.Iyer. February 4, 2010 4:34 PM
As you have rightly pointed out ,100 % of work is carried out by smaller per cent age of employees at present.
Under Fixed Pay system, employees with initiative and aggressive mind will work in right direction to achieve desired goal where as the performance of others, those who are not having that much drive or enthusiasm in doing their job, may not come up to level of organization’s goals.As a result those who are working hard will bring results while others need not put up that much effort on their part.That is a reality in banking industry.

Where as under PLP the first group will excel in their performance with increased satisfaction and and also with higher motivation .The latter groups performance can also be enhanced to certain extend in tune with organizational objectives..

-The present appraisal system itself in banks are having number of loopholes.
-If it is only target oriented,and measurable performance,employees may concentrate only to achieve the same and increase his pay rather than overall excellent performance of organization.
- Rate of attrition may be reduced

The basic and pertinent point here is the strength and quality of process of assessment of performance of an employee in an unbiased manner under a foolproof mechanism. If same can be streamlined advantage of PLP may surely beneficial to employees as well as organizations.

chandan said...

Referring adhitya 4, 2010 9:04 PM:

"Over qualification causes under employment and results frustration. Here is a mirror image."


sukhi said...

reffering chandan

adhitya said...
This comment has been removed by the author.
adhitya said...

referring Sh. Chandan

And under qualifications cause even serious problems Sir.
That is quite visible,even no mirror is required for that..
Thanks I cannt help it out.

chandan said...

Referring sukhi 5, 2010 10:29 AM:

Dear sukhi,

I am also recruited through BSRB, going through rigorous competition and finally qualified in three BSRB exams within a span of 14 months in 1992-93. So like you, our generation also gets through it by dint of their merit and not in sympathy.

I am also engaged in guiding aspirants for different competitive exams of banking, staff selection commission and railway recruitment boards for a long time and quite aware of the pattern of exams.

I have a left over service more than 16 years and this is a very long period. My experience is, during eighties & nineties talents were joining in banking industry, but in last three four years, those who are joining here, are joining for getting an employment and the job will be further deteriorated, once ninth BPS finally comes out.

It's a system failure, not any individual or group of individual's failure. None recovering of LOAN/ ADVANCES are the main reason. So if you have any concrete plan and that can bring solution to these, then please present. Other wise criticising this or that doesn't work.

Let us also know, what type of revolution, you want to bring, by declaring all of us retired at the age of 50. Waiting for your response.


chandan said...

Referring adhitya 5, 2010 10:20 PM:

Dear adhitya,

Those who recruited through BSRB in eighties & nineties are not under qualified for their respective jobs.The questions were prepared by IBPS for these exams and merit was the only determent factor.

O.P.Bhatt, Chairman SBI & K.C.Chakroborty, Deputy Governor RBI had started their career as Bank PO. So if you are really talented, as you mentioned, you being a Topper, MBA, hard worker for 12 hours at your job,certainly find scope to reach at these high position of Chairman and Deputy Governor at the end of your career. By the way I presume you are a Bank PO. So please don't dishearten yourself.


IYER said...

Dear Friends, Of late, I have been reading some write-ups throwing hatred over senior employees - some like the one written by Sukhi are more painful. He/she has opined that persons of over 50 years should be thrown out - he/she means both banking as well as the country! I do not know whether he/she has consciously included his/her parents and parents-in-law too! I pray the Almighty to give 'Sadbhudhi' to such revolutinaries! Any way my request to Sukhi is that please first of all learn to write/speak and use English properly - a lot of gramattical errors! And then, if possible, try to respect elders and make use of the opportunity to fine tune your wisdom from their knowledge and experience. Afterall learning is a life time process. We learn both 'dos' and 'donts' out of our every activity!

I do not need to elaborate and explain the importance of experienced people in banking or for that matter in the country. In every walk of life they come in handy with a soft hand to help. They use more of their lateral mind and arrive at matured decisions. Todays 50s were onece in 20s and entered into banks. Inspite of devastating effect of economic slowdown in the banking industry world wide, Indian banks withstood because of untiring work of all the people - consiting a majority of above 50s!

Of course because of a big gap in recruitments, there exists a very big gap of age resulting in a cultural divide. But it is no reason to justify hatred over one another. We have to take the banks forward hand in hand.

Somebody opined that seniors are not well in handling computers. It is all amazing to note their 'inventions'. I am 53 and using atleast five different modules in my bank and much comfortable with any menu driven system. Like me there are tens of hundreds of other people in the industry and we have been doing it for more than a decade. The so called younger generation is also working as only 'users' and not divising and presenting any software! Why this sort of heavy-headedness?

In fact we see the absence of essentials of banking industry viz., positive attitude, pro-activeness, adaptability, proficiency in language, proficiency in inter-personal relationship, communication skills etc., in the new generation people. It is said in sanskrit "Vidhya dadhathi Vinayam", where is the vinayam?

As rightly said by Mr Chandan, the present employee force in banking is considered to be 'cream of the society', and not any stuff to be thrown out by the revolutionaries like Sukhi. Sukhi should mean Sugam (happiness) and not 'Sukka' meaning dry! Please keep your heart moist.

Come on youngsters, you are no different and superior to your seniors. Try to come up and take the banks forward.

Parameswaran said...

Thank you Iyer for your valuable advice. Blog members please note that how matured he is. Younger generation members please take note of it and follow the footpaths of seniors. Take the good things from anybody. I can boldly say because of these senior members our banks are functioning. In addition to that I am little worried about the present day young genration employees knowledge about the banking. They do only if computer does the job. Please try to learn the basic banking fundamentals. Your seniors have traversed from manual, standalone computers, LAN and WAN environments. All younger generations employees derived the knowledge from their seniors. If there is no senior how you will get knowledge. So as Iyer said please do not write just like that. Think twice before committing anything on writing.

Sanjay Bhatt said...

Dear Iyer Sir,


Seniores are pillar of our banking industries and anywhere.

Today What We are and Where We are Its only due to our respectable seniores only.They spent their decads for it.

I salute and respect them.

Don't justify seniors like in this blog commentnow days by yungsters.

don't forgote our Indian culture and social system.

Me and We will be also stand on their(seniors) place after 20years.
Wait....Think.....And Go.....

gitanjali said...

reffering Mr sukhi dt 5th feb
sukhi won't ever be 50.

Pradip said...

People always wellcome the concept of "performance should be rewarded". But it shouldn't cost of your own income.

I mean now one's getting 100. But on implementation of 70:30. you are getting 70 and you have to work hard to rest of your's 30.

We can well come reward if it is like

You are geeting 100 & performance apprised and decied to give anything upto 30.

sucharita said...

Dear friends who have all posted their comments here..........

why the bank going for 70:30 concept and adapting negative motivation tequniques...

why not 100:130 concept and go for positive motivation........

chandan said...

Wage Revision -May be this Century by Subba Rao

Can we expect our wage revision at least by the end of this Decade!! or at least by end of this CENTURY !!!??? I don't thing it may happen with the present set of union leaders, Who are more worried about their Directorship than any thing else.

When the Central and state Governments are lavishly granting 30 % to 65 % jump in salaries we are fighting shamelessly for 17.5% which will work out to hardly 8% when implemented. We are not even sure when we will be getting our new salaries. The Government simply gives orders for writing off the loans but when it comes to increasing of salaries of the bank employees which is long due IBA puts so many hurdles and talks of load factor and expenditure etc.

Today the job of an Nationalised bank officer is worst than a peon in a state govt job - pay-wise, responsibility-wise, living standard-wise etc. These are raw facts, which the politicians and bureaucrats many not agree since they breed on govt funds. The bureaucrats salaries are increased multi-fold without any agitation by them, so they do not know the sufferings of the bankers.

In fact I have asked many youngsters not to join the nationalised bank but to join any other organization, be it Central / State govt or any pvt org for that matter which are much better in working conditions. The working conditions are deteriorating in the Banking sector. The less said the better.

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