Case study on SBI

CASE STUDY ON SBI
BRIEF EXPLAINATION OF THE CASE
POST-SBI-VRS SCENARIO
SBI-VRS is not as per expectation of management .. because
STRATEGIES FOR PROPER STAFF COST REDUCTION
Lessons from the case…
CONCLUSION

1. CASE STUDY ON SBI

2. BRIEF EXPLAINATION OF THE CASE In 2001 SBI faced severe opposition from its employees over VRS . The reason was THE INDIAN BANKING INDUSTRY WAS OVER STAFFED BY 35%. The Govt. Of India wants to trim the work force and reduce the staff cost As per the procedures, IBA formulated VRS package.

3. SBI promoted the VRS plan suggested by government. Employee Unions suggested that it is not a problem of staff cost but it is a problem with NPA’’s. Employee Union argued that VRS might force the closure of rural branches due to shortage of manpower.

4. In February 2001, SBI issued criteria for VRS. CRITERIA IS ONLY THOSE OFFICERS WHO HAD CROSSED THE AGE OF 55 WOULD BE GRANTED VRS 12000 OFFICERS WERE REJECTED. Rejected employees formed an association to oppose.

5. The association claimed that SBI Management was adopting discriminatory policies granting VRS. EFFECT : Average estimated cost per head for implementation of VRS for SBI and its 7 associated banks is 650000 and 570000 rupees.As a result SBI net profit decreased from 2500 cr in 1999-00 to 1600 cr in 2000-01

6. POST-SBI-VRS SCENARIO FACTORS AFFECTING INTERNAL ENVIRONMENT SBI's total staff strength was expected to come down to around 2,00,000 by March 2001 from the pre-VRS level of 2,33,000 . With an average of 5000 employees retiring each year, analysts regarded VRS as an unwise move.

7. By June 2001, SBI had relieved over 21,000 employees through the VRS. It was reported that another 8,000 employees were to be relieved after they attained the retirement age by the end of 2001. Analysts felt that this would lead to a tremendous increase in the workload on the existing workforce.

8. SBI-VRS is not as per expectation of management .. because   Lead to acute shortage of manpower in the bank  T he threat of bringing down the retirement age from 60 years to 55 years was putting a lot of pressure on senior bank officials to opt for the scheme. The Voluntary  Retirement  Scheme offered by  State   Bank  of  India  was not a compulsory retirement  scheme. Only those who wanted to get rid of their present employment and venture into new field, had actually sought benefit of this scheme.

9. STRATEGIES FOR PROPER STAFF COST REDUCTION Paying The Right Price Decrease Cost of Facilities Decrease Cost of Human Resources Reconsider Your Cheaper Choices Renegotiate, Renegotiate and Renegotiate

10. Focus on Cost of Risk and Funds Centralize Automate

11. Lessons from the case… A company should maintain a balance between workforce. Predict the future problems and prepare for it. Company would have to take serious steps to reorient its HRD policy to restore employee confidence and retain its talented personnel.

12.   31-03-01 31-03-00 % change Officers  52,558  59,474  -11.63% Clerical  103,993  115,424  -9.90% Subordinate  53,729  58,535  -8.21% Total  210,280  233,433  -9.92% TABLE II CHANGE IN SBI’s STAFF STRENGTH

13. CONCLUSION With the increasing pace of VRS implementation in corporate world, the figure of legal issue is also raised many folds. The various courts of I ndia given judgements have not only resolve the cases but also help to make VRS more pronounced. Demoralize and demotivate the employees should not be done at any point of time.