Centurion to offer variable pay to BoP staff

Centurion Bank will introduce target variable incentive (TVI) for Bank of Punjab (BoP) employees following the proposed merger of the banks to form Centurion Bank of Punjab.

In view of the strong brand name of Bank of Punjab, Centurion Bank is mulling the option of having a single legal name, while at the same time, maintaining two separate brands.

Immediately however, as a part of the integration, the bank will first address human resource issues, including that of salary.

"Performance-related pay structure will help match pay scales over a period of time. Implementation of variable pay is faster rather than rationalising existing pay scale," Shailendra Bhandari managing director and chief executive officer Centurion Bank said.

Centurion Bank had introduced variable incentive in 2004 which helped "charge up employee productivity", he added.

Introduction of the variable pay enables alignment of goals of the bank and that of individual employees. At the same time, the bank has to ensure that the key goals that drives variable pay structure are in place to measure performance. These would include topline growth, customer satisfaction, audit rating, expense management and bottomline delivery.

Each gets a particular weightage and is given a rating on a scale. Based on this a branch manager's TVI is decided. If he matches the target, he gets the TVI. Should he exceed the expectations, he could get as much as 180 per cent of TVI.

If he fails to fulfill the target set, he could end up with just 60 per cent of the TVI. "TVI is increasingly being used as a motivation tool. Sales people have a higher variable component than back-office employees," Bhandari said.

Centurion Bank of Punjab will have 3,300 employees. "There will be no retrenchment following the merger," said Bhandari.

"We will need personnel to grow the business. The integration of operations will result in some of the staff being released into sales and marketing," he added. The average age of an employee at both the banks is 28 to 30 years.

On the possibility of maintaining separate entities, Bhandari said both the brands were strong in their respective geographies and businesses.

"Bank of Punjab has 70 branches in Punjab, while we have just four. Obviously not too many people know us in the state," Bhandari said.

"It's an ideal marriage with minimum overlap in business and branch network," said Bhandari. Centurion Bank has a presence in south and west, while Bank of Punjab has a strong presence in the north.

At the same time, Bank of Punjab brings to the table a strong small and medium enterprises business in the north, retail assets, agriculture portfolio, deposit franchisee and foreign exchange business.

The break-up

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• Implementation of variable pay preferred over rationalising existing pay scale
• Centurion Bank of Punjab will have 3300 employees
• No retrenchment following the banks' merger
• Some staff may be relocated to sales and marketing
• Average employee age at both the banks is 28 to 30 years