It can, moreover, be a precondition in order to increase turnover and/or to be able to charge higher course fees. In fact, since the introduction of course fees for bank training in C.I.S. countries, there have often been less managers and staff participating in the courses.

In the C.I.S., as of today, it has proved to be difficult to generate sufficient interest and commitment for training. Not all banks realise the importance of such an approach and take part in the process of training and building up the required qualified staff for the transition period. How can one increase the interest of local banks in training (and consulting) products?

Let us first try to understand the specificities of the motivation for training process in the C.I.S. banks. We have, for instance, observed that « despite the level (or amount) of the needs, if the training of eastern managers has often proved not to be very efficient, it was mainly because things went as if the managers’ willingness and capacity/ability to absorb and apply western management skills was restrained by several motivational factors. We still need therefore to find out how to implement western management knowledge in the C.I.S. organisations.

That requires us to be able to overcome those underlying factors which prevent success. We could, for instance, take into consideration the following negative aspects of eastern managers’ motivations for training:

For some of them, if not for most of them, the participation on a course means above all an all-expenses-paid trip, a distraction is their major purpose. Therefore they do not attend to the courses very carefully, they do not pay much attention to what they are taught, and they hardly try to apply anything in their professional lifes.

Most eastern managers feel there is some kind of urgency for them to catch solutions and tools that could be immediately used in the conditions they are facing, in their own professional environment. They have no interest in theoretical aspects, and would, therefore, reject any lecture where the practical side was not immediately obvious. Whatever does not appear to be directly applicable is felt as irrelevant, thus boring, leading to people reading newspapers during the courses (”just as we used to do in Party meetings”). Even the most open minded eastern managers admit huge difficulties in relating theory to practice and thinking about how to apply management concepts into their environment.

Even if they would not agree with it, we several times felt that many eastern managers have ambiguous attitudes induced by the “fear of the Great Unknown”: wariness about acclimatizing to the new economic realities, fear of new ideas and practices, deep anxiety about change, etc.»

The obvious conclusion of these observations is that motivation for training depends mainly on the involvement of the bank’s management.

Sometimes, bank executives and top managers (who, in most banks, were initially central bankers) lack awareness of the necessity of permanent training, clearly do not consider training of great use for their banks, and are still reluctant to send their clerical staff to courses. We know, in some banks, cases of absolute unwillingness and conservative approach, towards training of staff members, on the part of top management. It will thus remain crucial to raise awareness about the necessity to manage change and the commitment for training among the top management of banks. For that purpose, it is possible to organise a workshop for banks’ top management and executives on the management of change.

Commitment of beneficiaries’ immediate management is also sometimes lacking. Contacts to the middle management of banks should be improved in order to increase training demand.

The active involvement of Human Resources Managers is also very useful. Through implementation of workshops with personnel managers, in order to develop their consciousness about their functions in the banks, it is possible to develop convincing arguments in favour of more training and to strengthening the personnel departments’ position vis-а-vis their respective top managements.

Finally, the motivation for training can be enhanced by working in collaboration with Banks Associations and Central Banks concerning the development of vocational standards for banking staff. The existence of such standards quite naturally leads to more demand for bank training.

- long past professional experience and, particularly, knowledge of the bank, the way it works and its organisational culture,

- technical expertise,

- motivation, commitment and ambition,

- reliability and loyalty,

- level of general competencies (diplomas,…),

- past experience of having successfully assumed rather high responsibilities, assumed leadership skills and aptitude to manage and motivate people

- team player, co-operative, group acceptance

- high individual contribution, registered past performances above average, reputation of being a strong achiever, extraordinarily productive, successful: To give personal performance a much heavier weight

- growth potential, trainability

- adaptability, being open-minded, creativity, ability to think about the long term, innovative capacities (young age), fresh breeze from the outside, with new ideas,

Discussion of the relative weight of these different criteria that should be considered.

A promotion is a move of an employee to a job within the organisation, which has greater importance and, usually, higher pay. Frequently the job has higher status and carries improved fringe benefits and more privileges. Its purpose is to improve both the utilisation and motivation of employees.

Methods

By management decision

This is where an employee is selected for promotion on the basis of information already known to the management. This method is quick and inexpensive and obviously suitable for a small organisation or for jobs for which the field of possible candidates is small and well known. In large organisations it may cause discontent because the decision is arrived at in secret, possible candidates not having the opportunity to state their qualifications for the post. In all cases, this method depends for its success on complete and up to date employee records which can be used to identify all possible candidates for the job.

By internal advertising

Employees are told by notices or circulars that a post is vacant and they are then invited to apply. Some or all of the candidates are interviewed and one finally selected. It is a comparatively expensive and time consuming method, but it is particularly suitable to a large organisation in which management cannot be expected to have personal knowledge of possible candidates. It does not rely on accurate employee records, and being open rather than secret, appears fairer to the candidates than the management decision method.

Promotion and motivation

Normally, employees derive satisfaction from a company policy of promotion from within, but badly handled promotions can cause dissatisfaction. The important points to note are:

The criteria for promotion must be fair – usually a combination of ability, relevant experience and length of service.

The method must be fair.

Selection for promotion must be based on appraisals by past and present managers.

The wage or salary offered to the promoted employee must be what the job deserves rather than what the management thinks the new jobholder will accept.

Unsuccessful candidates must be sympathetically treated.

There must be no discrimination

Transfer

A transfer is a move to a job within the organisation that has approximately equal importance, status and pay.

Selection for transfer

To manage human resources in a constructive way it is sometimes necessary to transfer employees to other jobs, sometimes because of changed work requirements and sometimes because an employee is unhappy or dissatisfied in his present job.

In some organisations it is the custom for the least satisfactory employees to be transferred from one department to another with the result that a transfer is regarded as discreditable, particularly if it occurs at short notice and without explanation. An unhappy employee may therefore prefer to leave the company rather than seek a transfer.

In other organisations transfers are used as a means of developing promising employees by giving them experience in several departments. A few organisations advertise all vacancies internally and consider applicants for whom the new job would be a transfer rather than a promotion.

Transfer policy

Transfers can increase job satisfaction and improve utilisation under the following circumstances:

A transfer is regarded as a re-selection.

The need for a transfer is explained.

Unsatisfactory employees are not dealt with by transferring them to other departments.

Requests by employees for transfers are fully investigated.

No employee is transferred to another district against his will.

An employee transferred to another district is given financial assistance from the company to cover removal costs, legal fees, refurbishing, etc.

Demotion

A demotion is a move to a job within the organisation, which is lower in importance. It is usually, though not always, accompanied by a reduction in pay.

Reasons for demotion

An employee may be demoted for these reasons:

His job may disappear or become less important through reorganisation.

He may no longer be thought capable of carrying out his present responsibilities efficiently.

Effects of demotion

Unless the employee has himself asked for it, demotion will probably have adverse effects such as:

There will be less satisfaction of esteem and self-achievement needs. The employee may show negative reactions to frustration.

The employee may become a centre of discontent in the organisation.

Other employees may lose confidence in the company.

An employee who resigns because he has been demoted without his agreement may complain of unfair dismissal under the special category known as “constructive dismissal”.

- Engaging numerous young graduates, with a tendency to hire people from the outside for managing positions and even to offer highly specialised positions to people coming from other firms.

- Increasing cross-functional mobility.

- Development and implementation of multiple promotion systems and channels (diversification of professional itineraries and different speeds),

…differentiation between fast and slow track paths, trajectory being distinct between “two-speed” paths (according to capacities measured by hiring tests and accompanied differentiated trainings),

…and constitution of breeding ground for agents with strong potential, either detected at the time of hiring or, often, selected according to the results of internal assessment centres (at least for managers). In-house evolutions and promotions rely, then, on extremely selective in-house appraisals, the share of merit consideration is increasing, which involves setting up sophisticated evaluation methods and structures for internal selection (exploration, experimentation and setting-up of multi-competence evaluation methods).

Discussion of the impacts of such practices

In many of the retail banks from western European countries, career management was characterised by:

- the initial entry of staff tended to be early in the career and at a low level. Even, in some banks, only positions at the lower end of hierarchy were filled with people from outside.

- banks offered long careers within one establishment (lifetime career paths). Employees tended to remain in the same bank for a long time.

So, there was a clear tendency to give priority to internal promotion vs external selection. Promotion to managerial positions was a selection process almost exclusively focussed on internal staff, job vacancies being covered by internal candidates (in-house promotion “coming from the ranks”).  Even if this has changed a lot, due to the recruitment of young graduates, there is still a will to preserve progression possibilities for managers who come from the ranks, to avoid discouragement.

- official progression channels were designed according to precise rules and procedures, along exact structures, systems that were predefined and, most of the time, uniform for every individual and cleared at comparable speeds.

Thus, career progressions were slow.

- criteria used for promotion were traditionally based more on seniority, passing through linear advancement, than on individual contribution or actual performance. Nowadays, seniority often goes on playing a preponderant role, even if it is hotly debated.

- most decisions were taken in a rather short-term perspective: for instance, there was almost no succession planning.

- there was little tradition of (internal) job mobility, which appears to be an obstacle to promotions (little progression towards taking responsibility):

- either geographically, the staff having a strong regional attachment, leading to great sedentariness,

- or cross-functionally: career development is very hierarchically formed. Often, careers used to take place “in the chimney” (within the same functions).

To day this situation is changing quickly, as young graduates perturb internal rules of stability and automatic and egalitarian progressions, sometimes inducing tensions.

Discussion of the impacts of such practices… and research of other ways to manage careers

Which remuneration should be reviewed?

Comparison to the normal or the average:

But such compensation, set up to encourage the type of performance desired by bank owners, is often more difficult to achieve.

Why is it useful to establish such a link between pay and performance

There is, first, a basic assumption that incentives generate motivation for high, or, at least, higher performances and for improvement of one’s individual performance. It is supposed necessary to stimulate or to maintain continuous efforts. We have already noticed that this not always true.

But, the contrary appears to be true, also. There should, thus, be, at least, room to acknowledge outstanding performances. And taking into consideration efforts and performances is also useful to attract and to retain the best performers.

And rewarding the efforts and sharing the results is also a matter of equity. People should be paid according to what they deserve.

But, equity is a subtle notion, highly depending on both cultural, institutional and organisational factors. For some people, it is obvious that recognition of individual contributions and merits, by rewarding people in accordance with their individual performance, is clearly a matter of equity. But some others consider, for instance, that equity relies much more on providing help to the weaker performers.

Amount of the variable part

The ideal amount of the variable or the fixed pay (between full fixed salary and wages depending completely on business results) is not easy to determine, as it depends on the type of jobs.

Nevertheless, it is commonly considered that, ideally, at least for managers, pay for performance and performance bonuses should represent a significant part (over 10 %) of the overall salary.

Individual vs collective distribution

Another point that should be considered is whether the bonuses are attributed to the individuals, considering their own personal performances, or to the group. One can distinguish, here, at least three levels:

- individually-based (personal reward function of own results, performances and merits),

- unit (or group)-based, equally shared among the members of each team: it encourages cohesion, maintains group harmony, decreases internal conflicts and induces interpersonal co-operation (ensures that people would help the others) and peer pressure that stimulate the performance of the weaker members of the group,

- company-based bonus or collective profit-sharing, function of the overall profitability of the firm, shared equally among the staff, every one being paid the same reward.

Such collective distributions are criticised because potential non-performance is not being accounted for in the remuneration. Poor performers and “free riders” (people who benefit from a group’s work although they contribute less than the other members of the group) should not benefit from others’ efforts.

Emphasis on individual or collective performance?

It would not be fair to « give » the same thing to everyone (egalitarism is inequitable)

Individual contributions

Not everyone makes the same : quantitative and qualitative contribution because aptitudes, skills and efforts may all differ, because posts are complementary the differences observed do not mean « obscure » posts may not play a vital role.

Not everyone cooperates to the same degree.

So, emphasis must not be placed solely on individual « production » targets which might encourage sterile or even harmful interpersonal competition or even sow the seeds of dissension

The diversified forms of compensation linked to efforts or performances

Pay supplements attributed according to performance can take various forms: introduction of premiums, bonuses, profit sharing, fringe benefits, stock options, etc.

They are sometimes criticised because of their negative effects:

- high pressure leading to stress,

- excess of internal competition, with the danger of overburdening,

- risk of opportunistic behaviours… which could result in a lack of attention to customer service,

- etc.

Table 2, here after summarises these critics. It shows also that the answer is mainly in the choice of the types of link established between the pay and the efforts or the performances.

For instance, there should be:

- a clear reference to an objective appraisal of result indicators, based on really desirable objectives. Previously setting specific targets (concerning financial results, such as productivity, quality,…) that have to be met, is necessary.

- a choice of criterion over which individuals have effective control (compensation that considers the activity for which the manager is responsible),

- no dependence on too complex variables,

- no too large distance in time between the contributions and the incentives,

- etc.

Table 2 How to avoid the pitfalls of profit sharing?

Training should always meet a need. Otherwise it is not efficient. The need arises from a problem situation involving skills, which may be defined as a “skills gap” (the gap between actual and desirable skills).

Any training needs analysis should cover the following factors:

- Actual change (in products, markets, technology, careers, etc.).

- Operational objectives: strategic planning, development plans, projects, and action plans.

- Human resources management: qualifications, mobility, career changes, promotions, competence, etc.

- Job definition and characteristics (roles, responsibilities, activities, etc.).

- Outcomes and results to be achieved: productivity, quality, etc.

- Situational analysis: unsatisfactory situations, dysfunctions, problems to be solved, etc.

- Individual or group claims, aspirations, interests, expectations, advancement, etc.

- Once identified, needs must be ranked.

The outcome of this stage is: “Needs analysis summary”

What is a training objective?

According to R. F. Mager (1972), a training objective is “an aim stated in writing which describes a change that is desired in the trainee. This statement specifies how the trainee will have been altered or modified after having successfully completed a given course of instruction; it states which behaviours it is hoped the trainee will be able to demonstrate.”

As can be seen from this, objectives flow logically from the study of the needs: they indicate who is to be trained to reach which outcome when.

Defining training objectives

It is essential to set training goals, to define the scope and understand the overall significance of the training.

Why should training objectives be defined?

There are, at least, five reasons:

- The design of appropriate training programmes that…

- meet the real needs and performance levels expected of trainees on completion of the programme, which assume that the course aims have been clarified beforehand. Objectives are set in order that trainees can actually reach them!

- allow the company or the establishment to achieve its own objectives, i. e., having skilled employees who are ready to meet the challenges of their present and future work,

- indicate clearly “where we wish to end up”, and, thus, provide a reliable guide (for trainer, trainees and institution alike) to “where we are headed” at any given moment in time,

- facilitate communication between the various participants: every communication situation benefits from all actors knowing what the “rules of the game” are, before “play” begins.

- Trainee motivation (insofar as they know what they will be doing, why it is to be done and how).

- At the implementation stage, objectives are the pivotal reference-point which allows appropriate methods to be selected; the more specific and well-focussed the objectives are, the easier it is to choose the right training methods. This also ensures that trainees will, in fact, be able to perform pre-defined tasks. For instance, even the most brilliant lecture by an expert in the field is not sufficient, if the desired result was to train participants to repair a microcomputer.

- To make adjustments, whenever necessary, to the training programme, as it progresses: in other words, to correct or re-position the aim as required (to make it more relevant to long-term goals, for example, or to bring it more in line with trainees’ expectations and needs, etc.).

- To monitor and confirm attainment levels (i. e. that targets are being reached):

- verifying, at each stage of the training process, that both trainer an trainees are achieving what they had hoped or expected,

- assessing results once training has been completed: the final impact of the training. How else can efficiency is determined, except through defining what the training was ultimately to be used for?

The different levels of training objectives

Training objectives can thus be situated on different levels:

- Firstly, they say what is to be learnt: the behaviour which, at the end of the training, the trainee has acquired (“what we want the participants to be able to do once they have finished the course”).

- Beyond this, they also describe hoped-for outcomes: what trainees are supposed to be able to achieve when they return to their jobs, the changes that will be observed, the expected improvements, the progress to be made, the criteria for evaluating the consequent outcomes.

It is especially important to distinguish between:

- operational objectives: business targets to which training can contribute,

- the tasks inventory, which defines general aims and related training areas,

- performance objectives: how training will affect the performance of trainees in their day-to-day work,

- training objectives: actions which trainees will be able to perform, in a work situation, on completion of training,

- instructional objectives (also called learning objectives), which specify attainments to be achieved at the end of a training session and are thus necessary for shaping the course structure itself (e. g. course content, relevant learning activities, sequencing of course modules, etc.).

Base rates used to be established through collectively negotiated agreements and fixed according to conventional structures, in a rather rigid manner (codified system of scales). This is largely due to the centralised collective bargaining system defining national industry-wide agreements.

Salaries were relatively high (compensation used to be higher than in other businesses, for the same qualifications), at least when taking into consideration the weight of insurance contributions and charges even if the possibilities for wages progression are, now, more and more restrained. And automatic and uniform premiums can double theoretical salaries.

Remuneration policies have been almost exclusively linked to job categories, eliminating individual differences. Banks based rewards far less on individual performances, than on occupation of a specific post. Wages were mainly linked to positions, according to classification, employment categories… and seniority. Many banks still try to emphasise position rather than pay and an orderly salary schedule position within the bank.

Differences in earnings were, thus, basically linked to changes in category, which, in turn, were closely dependent on rather rigid compensation practices.

All this was designed to guarantee minimum compensation levels, instead of promoting individual incentive. Virtually everyone on the same level earned the same amount.

So, pay hardly reflected the differences in individual performances, giving people little incentive to improve their individual contribution. This a pattern that does not encourage efforts.

Rewards were more or less a function of seniority, with automatic annual increases, all staff expecting at least that pay increases meet rises in the cost of living. So, pay increases were nearly automatic, according to seniority. Nowadays, in the majority of retail banks, for the most part, progression still remains linked to seniority (only explicit evolution criterion).

Pay per performance systems existed only at the higher hierarchical levels.

However, nowadays, management is trying to make wages more flexible and new compensation policies are appearing, at least for managers.

But, there is a rather strong resistance on the part of personnel to application evolution.

What do you think about such practices?

Example of an “ideal” compensation policy

Principles of an appropriate

Policy concerning compensation, wages and salaries

1- Total wage and salary bill should be kept under control…

- in relation to the real situation (wage + salary bill / G.D.P.),

- And in a long term view,

- While safeguarding the competence and quality of services (motivation of the staff).

2- Social balance should be preserved:

- internal: equity (perceived as legitimate) on essentials and sustained over period of time (progressive),

- external:

- competitiveness (attractive),

- without excesses (alternative to mobility).

3- Motivation should be stimulated:

Rewarding loyalty, dynamism, adaptability

- and efforts to improve,

- without disrupting cohesion (by creating exaggerated competition between individuals).

Example of the Priorities of a policy concerning compensation, wages and salaries, for a bank willing to improve its performance, while preserving its social peace

1- Restoration of equity:

- preservation of purchasing power,

- equal pay for equal work, including contribution (no excessive variability between categories),

- competitive pay / employment market (implies variability between categories).

2- Encouragement of performance:

procedures, progressive introduction, means

3- Control over wage and salary bill:

area of autonomy (overheads / G.D.P.).

4- Enhancement of professional standards:

Positioning on the basis of performance in post:

- adequate variations between categories (to face to the change of jobs),

- explanation of criteria for the salary increases.

There are five key elements in good compensation plans for banks:

- First the level of the wages that have to be compared with the level of the labor costs, but also with the competitiveness of the offered salaries, on the labour market, for each function.

- Second, the equity of the provided wages. Here there is need for a weighing of the posts, using a qualification and job classification method, according to required competencies and responsibilities that have to be assumed at every place.

- Third, the level of the differentiation between posts and among each functions. If one does not want to induce a tendency to try to leave the functions to increase the salary, the compensation plan should be flexible enough so that staff in lower ranked positions can get higher overall compensation than higher ranked managers.

- Fourth, there should be room for progressions, so that every member of the staff could have the hope that his (or her) efforts could result in an increase of his (or her) salary.

- Fifth, all key officers (at least) should have some of their compensation specifically linked to their own activity (efforts) and results and, eventually, to the performance (profitability, level of risks,…) of the bank (referring to its long-term interests). It’s a matter of equity and a condition for the staff’s motivation.

The question of the level of salaries

Compensation should be organised so that the bank is paying competitively for the task performed. Many banks remain way behind other financial and non-financial businesses in providing compensation plans that emphasise keeping key managers, but most bankers realise now that banks are not serving their long term strategic interest by relatively underpaying their key staff. To keep key performers, a bank must pay as much as (or more than) other financial firms or provide appropriate incentives. Furthermore, insufficient salaries encourage the development of underground economy (secondary activities of the staff).

Interestingly enough, banks that pay productive managers well need fewer managers and have lower salary and benefit global expenses relative to assets, revenues, and profits. Non performing managers do not stay with such banks.

Inter-individual differences among salaries

The remuneration policy pursued by a company is reflected in the nature of the aspects that are remunerated and in the way in which the remuneration is determined.

This policy is characterised by options with respect to:

- the levels (average) of remuneration accorded,

- the overall spread of wages and salaries,

- the procedure for awarding and particular level of earnings (see the following table setting out criteria for differentiation)… and the variability of remuneration depending on three types of criteria (for a more complete description, see table 1):

- tasks performed (variations of remuneration from one job to another, proportion of overlap between staff holding different positions[1]):

- nature of the functions (complexity),

- levels of responsibility,

- characteristics of the staff (variations in remuneration for employees performing similar functions: central trend and dispersion) :

- age / seniority,

- competence,

- results:

- individual,

- collective,

- the pattern of the graphs of individual advancement (speed of increases at different points in the career) and differentiation to take account of the individual potential of employees, etc.

Table 1. The various criteria for wage and salary differentiation