Implementation of HRMS in Indian Banks
Hemalatha Diwakar and Sushama Chaudhari
National Institute of Bank Management
NIBM Post Office, Kondhwe Khurd
Pune 411 048
Abstract. The Public Sector Banks in India in which the government are ma-
jority shareholders are inducting technology based banking solutions that are
well aligned with their business objectives to achieve business success. In the
process the banks have realized that for technology to be used efficiently an
HRMS in place is mandatory. In this paper, we show why HRMS is crucial for
bank’s progress by presenting the currently existing conventional HR practices
and their drawbacks by using UML diagrams. A case study of a PSB that has
implemented HRMS successfully is described and the benefit the bank has de-
rived is shown by the time-manpower comparison matrix for various HR func-
tions. The issues that PSBs should keep in mind and the strategy that they
should follow for a successful HRMS implementation are presented.
1 Introduction
The onset of technology based Banking solutions, the initiation of financial deregula-
tion, globalization and hence the emergence of new techno-savvy market players in
the Indian banking arena, brought in a sea changes in the Public Sector Banks (PSB)
of India. The PSBs which account for nearly 72% of the Indian banking business,
realized the need for more technology based solutions and therefore opted for central-
ized Banking Solutions that allows the customer to do bank banking rather than
branch banking, a good MIS for better decision making, multiple delivery channels
for round the clock customer service. Each of these PSBs, have more than 1500
branches and over 20,000.employees on an average, spread across the entire country.
A consequence of the introduction of technology and IT enabled business processes
was the large scale re-skilling, training and redeployment of manpower from a branch
centric and geographic centric organization to a bank wide skill and role based or-
To support this new model, a centralized Human Resource Management System
(HRMS) is essential for effective decision making in HR as:
Currently available potpourri of HR packages offer few HR functions such
as payroll, HR inventory and remaining functions are performed manually.
This introduces enormous delays in HR decision making. For instance man-
power planning, staff transfers take more than a month for acquiring relevant
Diwakar H. and Chaudhari S. (2007).
Implementation of HRMS in Indian Banks.
In Proceedings of the 1st International Workshop on Human Resource Information Systems, pages 55-63
DOI: 10.5220/0002430700550063
data from the entire bank.
Presently HR data are scattered across multiple organizational units
(PSBs have typically three or four tier organizational structure such as
branches, regional offices, zonal offices and corporate office spread across
the entire country) with a small subset in digital form and the rest in paper
form. This leads to data duplication, inconsistency, lack of integrity, in-
correctness and incompleteness.
The banks have to review and align their human resources’ competencies
keeping in line with latest advancements in specialized banking areas and
continuous advancement in IT based banking solutions.
HR Self Service is essential in a lean IT enabled organization for carrying
out HR administration tasks that will relieve HR staff from labor-intensive
tasks and hence permit them to focus more on strategic HR issues. This
will also reduce response time in activities such as leave sanction, Provident
fund based loan sanction etc, by the workflow based transactions.
Information Technology contributes to man power reduction and hence
banks need to assess manpower availability against requirement, and intro-
duce, manage schemes like voluntary retirements.
It became evident that the PSBs instantly need a centralized HRMS [1] and many
PSBs in India have started working in that direction. Implementation of HRMS sys-
tem is a big challenge to these banks and is also unique in comparison to banks in
other countries considering the geographical spread of the Indian banks, their legacy
systems and the subsequent data migration issues. Collecting additional information
from employees, HR process reengineering, preparing for change management and
training the large workforce along with the selection of appropriate HRMS package,
and subsequent customization are also additional concerns.
In this paper, based on our knowledge of HRMS capabilities [2], [3] and the currently
prevalent HR practices in the banks, we demonstrate how PSBs can benefit by im-
plementing a HRMS as done by a representative PSB. We used structured interviews
for studying the representative bank. The paper is organized in the following way.
Section 3 has a background introduction of a typical PSB, its’ current HR processes
(henceforth referred to as conventional processes), with the most significant ones
described using UML diagrams viz., use case and data flow sequence diagrams.
Next , the case study of a PSB that has implemented HRMS is described and the
time–cost comparison matrix of the conventional versus HRMS for the processes
stated in section 3 is presented, to show the marked benefits the banks can accrue by
such implementation. With a mention of the experiences and derived benefits of a
HRMS implementation in this PSB, the paper concludes with a mention on the strat-
egy the banks should consider for such successful implementations.
2 Background
The Public Sector Banks in India, twenty of them in number, started banking with the
business motto of “neighborhood banking”. Almost all the villages in India have a
branch of any of these banks. In the 90s, the main branches of these banks that gener-
ate maximum business were totally automated but not networked, with the rural
branches remaining manual. The open economy and deregulation brought in new
techno savvy market players. These banks started with a centralized banking system,
a “customer centric business model” with banking domain experts as their core busi-
ness team, posed a great challenge to the PSBs. The PSBs which still hold 72% of
the total assets of scheduled commercial banks in India, started massive technical
investments towards the implementations of multiple service delivery channels, bank
wide network and Core Banking Solutions.
In the process of change, these banks realized the need for intelligently managing the
Human resources that they have, for which they needed a centralized Information
system, as they currently have a potpourri of HR systems with some fully automated
, a few semi automated and the most of the remaining fully manual. These banks
typically have independent Payroll, basic HR information, terminal benefits systems
that are computerized with a lot of data duplication. The PSBs typically have a three
tier or four tier organization structure - Branches-Regional office(RO)-Zonal office
(ZO)-Corporate office(CO) as shown in the figure 1. The ROs and CO have HR de-
partments. .All the above said HR systems are installed in their regional offices and
also in the corporate Office, as HR functions such as computing salary, leave applica-
tion are carried out only in the ROs. So the relevant data pertaining to all the employ-
ees of the branches falling under a particular regional office are stored only in that
regional office. It is interesting to note that in the PSBs, when an employee is re-
cruited he/she is assigned a home Regional Office to which he/she belongs. Mostly
the transfers are among the branches under his/her home region except in cases such
as, transfers on special request or management posting , or if the employee is in the
top executive cadre. In such cases, his/her entire records are moved from the last
posted RO to the current posted RO or CO depending on the placement. The point to
note is that different aspects of an employee data are stored in the branch, regional
office (RO) and corporate office (CO) and hence the entire employee data is not
available in one place and also is available as a mix of digital and paper form.
As data forms the core base for HR decision making, it is clear that from the way the
data is available, the time taken to make HR related decisions varies greatly. It could
take the bank from 15 days to two months, irrespective of whether it is regarding an
individual employee such as sanctioning of loan from Provident Fund or the entire
bank such as finding law graduates in the bank. Also many of these HR activities
needed information flow back and forth in the entire 3 tier hierarchy where the com-
munications are carried out purely using postal/ courier service, the delay is immi-
nent. Additionally, the data in all the organizational units are not current, complete
and correct .Hence the banks realized the immediate need for an HRMS that will
allow workflow based transaction processing and instant decision making in above
said cases.
Fig.1. Organization structure of a typical PSB with three tier architecture.
3 Conventional HR Practices
Some of the HR activities which are crucial yet time consuming in the conventional
legacy (current for most of the banks) scenario are presented using UML diagrams [4]
through use cases and sequence diagrams.
Man Power Planning. A typical example is finding out the lawyers in the bank to
strengthen its legal department by inducting more personnel. In such a scenario the
bank has to spend, more than a month to collect this information from the entire bank
as this kind of data is not part of any of their currently existing computerised HR
systems. The use case and the sequence diagrams of the same are presented below:-
Fig. 2. Use case diagram for Manpower planning.
Send man
power data
n at RO
Send man
power data
n at CO
Fig. 3. Sequence diagram for manpower planning.
Provident Fund Loans and Other Loans. Employees applying for loan against
provident fund or any other loan submit a loan application form and it takes a mini-
mum of 15 days as the system is purely manual ( paper form) and the communication
medium is used postal courier service.
Fig. 4. Use case diagram for loan sanction for employee.
The other significant HR functions which more or less take similar data flow paths
as the two examples given above are presented in Table 1. From these details, it is
evident that the current HR system scenario in the banks is not on par with the tech-
nology sophistication the banks have gone for. Hence it has become mandatory for
the banks to opt for a Human Resource Management System to reap the full benefits
of technology induction.
: Branch : Regional Office
Send manpower
Consolidate data
from all its
Send manpower
Data from all
its ROs
Accountant in
the branch
Submit loan
request form
Send to RO
Send to
HO after
Check for loan
Remittance or reject
Fig. 5: Sequence diagram for loan sanction.
Table 1. HR functions, data flows in the conventional legacy HR system.
No HR function name Process steps
1 Compensation
- Salary
Branch to RO
2 Conveyance reimbursement
Branch to RO
3 Terminal benefits From RO to Corporate office
4 Leave management
To know the leave status of the em-
Record room. Long queues, heavy de-
lays , errors
5 Training administration The staff training colleges used to send
the training calendar to regional offices
and await nominations.
6 Appraisal and Performance Fully paper based branch to RO to CO
7 Employee access to system (self service)
Income tax forecasting , Medical bills,
other benefits
All paper based requests , branch to RO ,
some times to CO
8 Management of Transfer and Postings Fully manual, collecting data from
branch to RO and then to HO
9 Promotions Collecting data from branch to RO to CO
10 career planning, Succession Planning Nil
4 HRMS Implementation - Case Study
: Re
ional Office
Corporate Office (Trustee)
Verification check for
If OK, Send forward
After studying the features of HRMS it emerged that the same HR functions quoted in
the section 3 will be carried out in less time and also results in considerable man
power reduction in HR department. The implementation of HRMS in the Union
Bank of India, the pioneer in HRMS implementation in Indian Banks, substantiated
the same. The Union Bank of India, [5] a hundred years old bank with manpower of
25,000, having more than 2000 branches, has gone for centralized Banking solutions
and has been implementing Oracle’s PeopleSoft Enterprise Human Capital Manage-
ment package[6],[7] since the last few years.
Structured interviews were conducted to study the various facets of HRMS imple-
mentation. Senior Managers in HR department, Project team members and select
users of Union Bank of India constituted the sample. Interviews were structured
around key HR subsystems such as Manpower Planning, Training, Employee ser-
vices, Compensation and Performance evaluation etc. The focus was to understand
how data related to each of these HR systems is managed and used after HRMS im-
plementation. On an average, an hour was spent per person. In Table 2, Union Bank
of India’s HR functions in the conventional legacy HR systems against the present
HRMS are compared in terms of man power reductions in HR department and re-
sponse time.
It is evident that the bank has utilised HRMS very effectively for HR self service and
other decision support activities..The Union Bank of India derived the benefits such
as, improved Employee morale, greater transparency due to its HRMS global service
rules, faster decision making (PF loan, leave etc), centralized HR database that is
instantly accessible to all its ROs and Corporate office and most importantly reduc-
tion in staff looking after salary and funds function (from 60 to 20).
The bank attributed its success to top management’s support in keeping the project
team same throughout its entire HRMS implementation cycle and giving highest
priority for collecting its employee data , cleaning the existing data before migration ,
deploying personnel Officers as HR administrators for prompt updation of data. The
bank faced challenges while collecting additional employee information, cleaning the
existing employee data, assessment of hardware requirements and also resistance
from employees to use the new workflow based system Even then with a change
management in place and incessant support from the top management made the Un-
ion Bank of India see the light.
5 Implementation Strategy and Conclusion
In order to have a smooth implementation of a HRMS, the Public Sector Banks can
follow the strategy of engaging a single project management team for the entire dura-
tion of the project; identify its requirements in HRMS, considering its business objec-
tives and prioritise the modules the order in which it wants to implement; identify
what data it already has, where and in what form, how old it is and then check for its
correctness and identify other data requirements and collect from the employees;
Select the product that is web enabled, has workflow mechanisms, uses multi tier
architecture and also widely used package, as it will be well supported ; Simultane-
ously carry out Human Process Reengineering (HPR), rework with package for cus-
tomisation as. the HPR may bring in changes in the organization structure as well and
hence prepare a change management and training program for the entire bank; Finally
data migration relates issues.
Table 2. Time, manpower comparison of HR functions in conventional systems against
No HR function name Time delay/man power
in conventional system
Time delays/man power
Involved in HRMS
1 Man power planning More than a month Instant.
2 Management of Transfer
and Postings
Two months Computerized system for transfers
deciding and takes less time
3 Promotions Two months Under implementation
4 career planning, Succes-
sion Planning
Nil Online system for career planning (under
1 Loan (PF loan) 15 days Online form filling and workflow, hence
within 24 hrs.
2 Compensation
Normally a week or more
;With 15 employees from
HR dept
Two to three days with only two em-
ployees in HR department carrying out
this activity
3 Conveyance reimburse-
Two months Two to three days
4 Terminal benefits 25 persons from HR
Now only 15 persons
1 Training administration A fortnight to a month of
Availability of online training calendar.
Nomination and intimation with no time
delay; selected employee record updated
2 Appraisal and Perform-
Nearly two months Online self appraisal form submission,
instantaneous review by superiors ,
employee record updated reflecting the
1 Leave management
To know the leave status
of the employee
Long queues, heavy delays
, errors
Immediate, Online submissions of leave
application, workflow system , status
known after the superior’s decision
2 Employee access to
system (self service)
No self service, paper based
form for any information.
Provident Fund statements
were given once in six
Leave requests, loans, income tax fore-
casting , medical bill settlement, benefits
all on self-service, PF records online
In this paper the need for HRMS in PSBs is emphasised and the benefits they can
achieve are brought out by presenting a successful implementation of HRMS in a
PSB Keeping in mind the manpower, size and geographical spread of Indian banks,
an online user friendly HRMS package will greatly help them in utilizing their tech-
nology based banking solutions to attain their business goals..
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