[sbinews] SBI mulls performance-linked pay for officers (Business Standard)

  • From: "Rajendra S. Pai" <rs.pai@xxxxxxxxx>
  • To: <sbinews@xxxxxxxxxxxxx>
  • Date: Fri, 1 Oct 2004 09:43:44 +0530

SBI mulls performance-linked pay for officers
(Business Standard)
 Poornima Mohandas / Mumbai September 28, 2004

Taking a cue from the private sector, State Bank of India (SBI) is
considering a proposal to offer variable pay to its over 60,000 officers.

If the proposal gets implemented, this would be a first among the public
sector enterprises in the country.

The country's largest commercial bank is internally working out the details
of the plan now. At the second stage, it will have to win support of its
officers' union.

It will also require the nod of the government and its owner - the Reserve
Bank of India. According to the proposal, the salary package will have two
components - fixed and performance-linked incentives, which will vary from
officer to officer.

The variable component is likely to be as high as 50 per cent of the fixed
amount. The scheme would be applicable right from the junior officer level
to the general manager level. All the 60,000 officers of SBI are members of
the All India State Bank Officers Federation.

The federation would have to agree to the variable pay scheme for the
proposal to gain momentum. Discussions with the union are yet to commence.

The bank is also planning to hire 500 agriculture officers on a variable pay

Among the public sector banks, Bank of Baroda has hired a few senior
executives offering them market related salary packages. Dena Bank too has
recently advertised looking for middle level executives. However, Dena is
not planning to offer market related salary.

The proposal for variable pay in State Bank is in the initial stages and
many employees don't see the idea crystallising since SBI, like all other
nationalised banks, is part of an industry-wide wage settlement process for
its officers and clerical staff.

Opposition from the unions may be another big obstacle. There is also
concern among officers that the appraisal model for performance measurements
may be subjective and faulty.

The last industry-wide wage settlement expired in October 2002 and
negotiations for the latest round have been on.

This could be the last industry-wide settlement in the Indian banking
sector. The management has asked for mobility and full computerisation as
preconditions for signing the settlement.

The unions, however, have been resisting the move. There has been one round
of industry-wide strike protesting against the management's move.

Industry observers say that the State Bank move, if it succeeds, could be a
model for other banks to follow.

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