Influence of Employee Productivity on the Performance of Public Sector Banks in India

Abstract

Indian financial services industry is dominated by the banking sector that contributes significantly to the level of economic activity. Banks are the backbone of financial system and play an important role in economic development. Human resource is the most important asset of the organization and banking sector is no exception to it. So to encourage employee productivity becomes one of the major objectives of banks. The present paper intends to analyze employee productivity of sixteen public sector banks during the second reform phase from 1998-99 to 2012-13. The parameters used to depict employee productivity are net profit per employee, spread per employee, interest income per employee, total expenditure per employee and deposits per employee. The tools used to measure employee productivity include Herfindahl's Index of Concentration and Exponential Growth Rate (EGR). The result depicts that Syndicate bank occupies the first rank in terms of net profit per employee, spread per employee and deposits per employee because the Exponential Growth Rate of Syndicate Bank is highest among all the public sector banks with respect to these three variables. In regard to exponential growth rate of interest income per employee and total expenditure per employee, Allahabad Bank is at first rank. It is also inferred that IDBI Bank occupied the last rank with respect to all the five variables of employee productivity i.e., net profit per employee, spread per employee, interest income per employee, total expenditure per employee and deposits per employee because its exponential growth rate is lowest among all the public sector banks with respect to these five variables. As the IDBI Bank occupies last rank in regard to exponential growth rate of total expenditure per employee, it has positive impact on employee productivity of IDBI Bank. The paper concludes with certain suggestions to improve the operational efficiency of banks