Home > Sample essays > How Human Resource Management Shapes the Success of Organizations

Essay: How Human Resource Management Shapes the Success of Organizations

Essay details and download:

Text preview of this essay:

This page of the essay has 1,929 words. Download the full version above.

In today's changing world, organizations are going through rapid changes in every sphere. The rate of change has increased to the limits of our endurance. Individual employees all over the world are constantly conformed to new and more complex working environmental forces, demanding new level of knowledge, improved skills and better understanding.

An enterprise success factors depends on many factors and amongst all those manpower i.e. human resources play a pivotal role. For efficient running operation of an organization proper management of human resources should be done and on that part HRM plays an important role.

According to Likert, “Every aspect of human activity is determined on the basis of competence, motivation and general effectiveness of the organization. Of all the tasks of management managing the human resource is the most important task because all depends upon how well it is done.”

In India, though we appear to be rich in human resources, our industries run short of useful human resources. One of the reasons for the company’s success is the highest level of customer satisfaction which has been maintained through providing the consistent performance and quality and that can be maintained only when the employees are highly efficient and skilled.

Training is the corner stone of sound management; it is actively and intimately connected with all the personnel or managerial activities. It is an integral part of the whole management programme

There is an ever present need for training because, it enables employees to develop and rise within the organization, and increase their ‘marker value’ earning power and job security. It enables management to resolve sources of friction to bring home to the employees the fact that the management is not divisible. It moulds the employee’s attitudes and helps them to achieve a better co-operation with the company and a greater loyalty to it. The management is benefited in the sense that higher standards of quality are achieved; a satisfactory organizational structure is built up; authority can be delegated and stimulus for progress applied to employees.

Ongoing development is today's new form of job security. People need to learn continuously. By developing, stretching and continually challenging themselves, employees can build a skill base; reputation and a network of contacts which will make them fit to be always 'employable'

The expedition towards a knowledge economy demands the new additional type of competencies like team spirit, assistance, etc. To arrive at this in high productivity places like banks, the lifelong learning concept should be applied to its personnel. With the kind of reforms and the resulting changes that are currently overawing the Indian banks, the exigency to instill such competencies among the workforce is getting heaped on in the banking sector.


1.11 Introduction:

Banking is as old as our civilization. The structure of banking varies   widely from country to country. Often a country’s banking structure is a consequence of the regulatory regime to which it is subjected. The banking system in India works under the constraints that go with social control and public ownership. Nationalization, for instance, was a structural change in the functioning of commercial banks which was considered essential to better serve the needs of development of the economy in conformity with national policy and objectives. Similarly to meet the major objectives of banking sector reforms, government stake was reduced to 51 percent in public sector banks.

The general banking scenario in India has become very dynamic now-a-days. Before preliberalization era, the picture of Indian Banking was completely different as the Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance.

The Reserve Bank of India was nationalized on January 1, 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948. In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India." The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors. By the 1960s, the Indian banking industry had become an important tool to facilitate the speed of development of the Indian economy. The Government of India issued an ordinance and nationalized the 14 largest commercial banks with effect from the midnight of July 19, 1969. A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason for the nationalization was to give the government more control of credit delivery. With the second dose of nationalization, the Government of India controlled around 91% of the banking business of India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalized banks and resulted in the reduction of the number of nationalized banks from 20 to 19.

In the early 1990s, the then Narasimha Rao government embarked on a policy of liberalization, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank.

This move, along with the rapid growth in the economy of India, revitalized the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks.

1.12 Evolution of Indian Banking:

The Banking industry in India has grown in a specific kind of environment and with some defined objectives.

Figure 1.1: Evolution of Indian Banking

This historicity of this environment and the objectives has a strong bearing on the operations and management of present day. To appreciate any economic dimension of the banking industry in India in a proper perspective, understanding of the path of evolution of the industry is a must. The origin of banking industry may be tacked back to establishment of Bank of Bengal in Calcutta in 1786. Since then the industry has witnessed substantial growth and radical changes. As on March 2011, Indian banking industry consisted of the 234 Commercial Banks.

The first bank in India, though conservative, was established in 1786. From then till today, the journey of Indian banking system can be classified into four distinct phases:

Phase I: The General Bank of India was set up in 1786. Next came the Bank of Hindustan and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called them presidency Banks. These three banks were amalgamated in 1920 and the Imperial Bank of India, which started as private shareholders banks, was established with mostly European shareholders.

In 1865, the Allahbad Bank was established, and, for the first time, exclusively by Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1923, Banks of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank and Bank of Mysore were set up. The Reserve Bank of India (RBI) was established in 1935.

During the first phase, the growth was very slow and banks also experienced periodic failures between 1923 and 1948. There were approximately 1100 banks, mostly small. As per the Reserve Bank India Act of 1934, the Reserve Bank of India (RBI) was constituted as an apex bank without major government ownership. To streamline the functioning and activities of commercial banks, the Government of India came up with the Banking Companies Act, 1949 which was later changed to Banking Regulation Act, 1949. As per the Banking Regulation (Amendment) Act of 1965 (Act No. 23 of 1965), RBI was vested with extensive powers for the supervision of banking in Indian as the Central Banking Authority. During those days, the public confidence in banks was somewhat low and, so, deposit mobilization was slow. Abreast of it the savings banks facility provided by the postal department was comparatively safer. Moreover, funds were largely given to traders.

Phase II: The government took major steps in the Indian Banking Sector Reforms after independence. In 1955, it nationalized the Imperial Bank of India (the State Bank of India Act) with extensive banking facilities on a large scale, especially in rural and semi-urban areas as the first phase of nationalization. It formed the State Bank of India (SBI) to as the principal agent of RBI and to handle banking transactions of the Union and the State Governments of the Country. In 1969, seven subsidiary banks of the State Bank of India were nationalized as a major process of nationalization due to the effort of then Prime Minister Mrs. Indira Gandhi, Later in 1969, 14 Major Private Commercial Banks in the country were nationalized. The list of 14 banks nationalized in 1969 was;

1) Central Bank of India

2) Bank of Maharashtra

3) Dena Bank

4) Punjab National Bank

5) Syndicate Bank

6) Canara Bank

7) Indian Bank

8) Indian Overseas Bank

9) Bank of Baroda

10) Union Bank

11) Allahabad Bank

12) United Bank of India

13) UCO Bank

14) Bank of India

The second phase of nationalization of Indian banks was carried out in 1980, with seven more banks being nationalized. This step brought 80 percent of the banking segment in India under government ownership The Government of India has taken the following steps to regulate banking institutions in the country:

1949: Enactment of Banking Regulation Act

1955: Nationalization of State Bank of India

1959: Nationalization of SBI subsidiaries

1961: Insurance cover extended to deposits

1969: Nationalization of 14 major banks

1971: Creation of Credit Guarantee Corporation

1975: Creation of regional rural banks

1980: Nationalization of seven more banks with deposits over Rs. 200 crore.

After the nationalization of banks, the branches of the public sector banks in India rose to approximately 800 percent in deposits, and advances took a huge jump by 11,000 percent. Government ownership gave the public implicit faith and immense confidence in the sustainability of public sector banks.

Figure 1.2: Phases of the Evolution of Banking Industry

 Source:  D&B Industry Research Service

Phase III: The third phase of development of Indian banking introduced many more products and facilities in the banking sector in its reform measures. In 1991, under the chairmanship of Narasimha, a committee was set up under his name, which worked for the liberalization of banking practices. The country flooded with foreign banks and their ATM stations. Efforts are being put in to give a satisfactory service to customers. Phone banking and Net banking have been introduced. The entire system has become more convenient and swift. Today, time is given more importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any external macroeconomic shock as other East Asian countries suffered. This is all due to a flexible exchange rate regime, high foreign reserves, the not yet fully convertible capital account, and limited foreign exchange exposure to banks the their customers.

Phase IV: The next stage for the Indian banking has been set up with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4%) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more.

...(download the rest of the essay above)

About this essay:

If you use part of this page in your own work, you need to provide a citation, as follows:

Essay Sauce, How Human Resource Management Shapes the Success of Organizations. Available from:<https://www.essaysauce.com/sample-essays/2016-3-22-1458639810/> [Accessed 10-04-24].

These Sample essays have been submitted to us by students in order to help you with your studies.

* This essay may have been previously published on Essay.uk.com at an earlier date.