BoB likely to be first public bank to offer variable pay

Bank of Baroda (BoB) is likely to be the first nationalised bank to introduce performance-related pay for almost 2,800 of its officers. This is close on the heels of the finance minister urging banks to make "radical suggestions" as they push for managerial autonomy. The board will take up the proposal at its next meeting.

Branch managers of the 2,700-odd branches, 50 regional managers, over 15 zonal managers and general managers would get a share of the bank's profits, once the proposal is approved by the board.

"We want to reward our performing employees. We want to give 'the performers' a lumpsum amount based on their performance, which will be outside the wage settlement package," said chairman & managing director, A K Khandelwal, on the sidelines of a press conference held today in Mumbai on the launch of an online money transfer service.

BoB is the first public sector bank to talk of taking such a bold measure to retain its staff. State Bank of India (SBI) has also been mulling an incentivisation package but that was to be within the overall industry-wide wage settlement package, which meant that there would be little headroom for monetary incentives.

BoB proposes to allocate a part of its profits to reward the productive staff. "We want to first reward the staff whose work can be measured," said Khandelwal. The bank is considering to hire an HR consultant.

This is despite the fact that it has a strong human resources steering committee comprising directors, HR experts, academicians and the chairman himself.

BoB has further stepped the gas on fast-track promotions for its staff, thereby rebuffing the age-old eligibility criteria of having a five to seven years' service period.

"Assistant general managers (AGM) have been promoted to deputy general manager level after serving for just one and a half years in the post of AGM," said Khandelwal. Seven general managers and 16 deputy general managers have made it through the fast-track route this year.