Achieving Targets- Myths and Realities

I had heard about the word target when I was a school student. At that time I was a Sanskrit Student and our teacher told about target while telling the story of Mahabharata in which how Arjun became successful in Archery. Next time I heard about this word when I was studying for Pre-degree in a college where I had joined for NCC. The Officer who was in charge of our battalion taught us about target while practicing firing. It was the point to which we had to aim while shooting and the bullet had to strike at this point. Later when I joined a bank, I again started hearing about targets and achievements. This time it was neither Archery nor bullet, it was business target.

On those days targets were mainly fixed for deposits and managers used to run helter shelter to achieve their targets at the end of every quarter. Those failed to achieve targets used to lose their chance to get promoted to the next scale. Those who achieved targets were given awards and appreciation. They were also considered in the promotion process. The responsibility of achieving the targets had rested with the branch manager who used to get the support of staff and officers working under him. But these people did not get any punishment for not achieving targets, but they used to get appreciation and good remarks in their service records which also had a weightage in considering for promotions. Hence it was a team work on those days.

Every business organization has targets for their business. A manufacturing company targets at sales and production. Why I put sales first because production should be based on sales potential. Service organizations also have targets where it is their income. The companies and service organizations fix business targets with aim of increasing profit. Profit is the base for survival. An organization earning good profit every year attracts investment. A company which is listed in the stock market and where their shares are traded definitely aim at increasing the profit in order to attract investments. All investors will invest their funds only in profit making companies and will withdraw their investments from the loss making companies. For example the Central Government had sold out their stake in loss making companies a few years back.

As already mentioned banks were targeting increase of deposits. Increase in deposits brings more liabilities and higher interest expenditure which would bring down the profits. Alternatively, targets can be fixed for loans. I used to get calls from many banks almost all days enquiring whether I wanted loan. The reason for fixing target for loans may be for generating more interest income. But insisting on achieving targets for loans alone may result into increase in non-performing assets also unless this portfolio is handled carefully. Because, the enthusiasm of managers to achieve their targets and please their bosses may end up in granting loans secured by fake assets or no assets. Today banks are competing with each other to increase their home loans portfolio. But this sector is very dangerous because of the risk involved in establishing the title of property pledged as security. Recently the Honorable Supreme Court had issued order to RBI for framing necessary guidelines to get search certificate for title of the property pledged by verifying documents for the previous 30 years. The risk of concentrating on loans is that not only it can create dead assets, but also can increase expenses by incurring legal expenses for litigation for recovery. In many cases loans may have to be written off partially or accumulated interest may have to be forgone for the purpose of recovery of principal amount. All these will affect the profit of the banks adversely.

Now the question is how the profit can be increased. Of course lending cannot be avoided completely. Lending is required for meeting statutory and social obligation where the generation of interest income is low. But loans against pledge of gold, silver etc. is considered as well secured if the supporting securities are verified for its purity and value properly. Similarly loans against pledge of shares, deposits etc. are well secured, but the interest income may be comparatively low. My suggestion is that instead of fixing targets for loans, aim at increasing profits.

For fixing profit based targets, it is necessary to identify profit centers. Profit centers are those regions or segments which are having high potentials for generating profits. Certain centers are loss making because they have no potentials for generating profits. But their existence is necessary for the other centers to make profits. Hence fixing targets appropriate to each center is also essential to be successful in achievement.

Another essential factor is people. Some people are experts in marketing and generating business that ensures high profit. But some others are good at organizing and administration. Such people should be deployed in administrative offices. Even marketing people have to be deployed based on the language they are able to speak. For example a person who speaks Malayalam well need not be good at villages in Karnataka or Telungana because in those places people will be more friendly with officials speaking their language. Hence even if the area is highly potential for profit, the personal factor may either reduce profit or delay in generating profits.

I would consider segments also for fixing targets. All segments are not equally suitable for growth. While some segments are having high growth potential, some are not. Some segments are statutory and social obligations. For example loans to farmers are essential despite its low income generation due to low interest rate. In olden days one of the major segment for generating income other than interest income was remittances like bank drafts, mail transfers and telegraphic transfers. The advent of internet banking has now eliminated the necessity of these instruments by replacing them with internet based money transfers which are more efficient, quick and costless. Segments having high growth potential will help to generate more profits.

There is time factor also which has to be considered while fixing targets. The growth is seasonal as far as some business is concerned. For example building activities will be slow during monsoon season. The floods and landslides can affect the life of people staying in hill side. So targets for loans may not work out in such centers throughout the year. If loans are given to places which are more prone to wild animals’ attack, flood and natural calamities may ultimately become a loss making process since sometimes there would social pressure to write off such loans. But these loans cannot be exempted or avoided, but it is not advisable to consider these areas for achievement of profit targets.

Many times we fail to appreciate achievements, whether it is small or big. Appreciation encourages hard work for canvassing business. But often what happens is firing and penal action for non-achieving quarterly targets without looking at the reason for achievement and giving support and guidance for achievement in the next quarter. Support and guidance increases confidence and tries hard for becoming successful.

Targets are normally fixed for a branch or the organization. Individuals are only representatives for achieving targets. Hence it is not an individual’s only responsibility for working on targets. It should be a joint effort. Hence delegation is essential so that everyone will feel responsible for achieving the targets fixed for their branch. When targets are achieved, the appreciation should be given to all irrespective of size of achievement, but those contributing major efforts deserves special appreciation and rewards. In many banks they are felicitating best performer of the month in their branches by exhibiting the name of the performer with photograph in the branch and giving rewards. Another example of giving support and guidance by top management by organizing sales exhibitions and melas like the loan melas organized banks in which the head of the organization or head of the region also takes part.

Governments also give targets to their officials for collection of taxes as well as disposal of files. Here the achievement of targets enables the governments to increase the tax collection and meet achieve the budgeted revenue collection. However, threatening officials may also generate wide spread complaints from the general public. Targets for disposal of files enable taking quick decision making by officials and reduces complaints from general public. Hence targets can bring positive and negative results too.

However, I find that there are many instances where targets are fixed without considering these factors and the officials responsible for achieving targets are threatened with punitive action like transfer to remote places or demotion. It is like loading a bullock cart with logs beyond its capacity. While discussing about the pressure on individuals from top management for achieving targets, we cannot ignore the suicides or attempts of suicides happening or happened in this sector being unable to bear the threatening of punitive action or abuses. Definitely, life should have targets, but that should be for living and not for ending the life.

Future of Indian Banking, Threats and Concerns

 

A few months back I happened to read a news item in wch it was alleged that a lady employee of the accounting firm Earnest and Young succumbed due to cardiac arrest said to be consequent to the work pressure in the company. Interestingly, Ashneer Grover, the founder of BharathPe also had pointed out the undue work pressure in the corporate offices in India and had told that he had to leave the office of E&Y on the first day of joining due to the dull atmosphere in the office despite the attractive salary package offered to him. The issue has now attracted the attention of the Central Government and the political world in India and in this article I am trying to invite the attention of the relevant authorities to similar situations in the banking sector too, especially faced by women employees.

The work pressure in the banking sector is very high now a days because of which many officers working in banks, especially ladies are reaching home very late at night. Recently, one of my friends told me that his friend’s daughter who was working in a public sector bank in Bengaluru used to reach home by 9.30 pm or even 10 pm on almost all days. Unfortunately nobody is bothered about the working condition of ladies in banks. Some of my relatives’ and friends’ daughters or wives are working in banks and I have seen the pathetic condition of their families. There are many cases of bank officials committing suicide due to undue work pressure, while a majority opted for voluntary retirement. In an article appeared in The Sunday Guardian dated 11^th February 2024, the author Abhinandan Mishra had highlighted the alarming rate of suicide deaths in banking sector, which according to him was over 500 in the past decade.

The management of banks are more interested in achieving targets only and not concerned about the health of the employees. I had been a senior level officer of a leading private sector bank for 27 years before switching over to teaching profession and had never experienced such work pressure. On those days we did not have computer and the work was done manually. Still we could finish our works daily before 6 pm on almost all days, except on half yearly and annual closing days. Ladies were not allowed to remain in office after 6 pm on those days. But now the situation is different. I am seeing lady officers staying in my adjacent flat, coming late almost every day. Often they are forced to work on holidays also.

Working after office hours is not a good practice. At some point of time, sitting late in office was considered as inefficiency or an opportunity to commit frauds. Now a days sitting late has become a routine affair said to be due to increase in work. The increase in work pressure is due to lack of work planning and also because the officers are not trained in time management, prioritization, delegation etc. Work allotment is also not according to the knowledge, capacity and expertise of individuals. The staff postings are not done considering the knowledge and ability of the staff to converse in the language of the customers of the branch where they are transferred/posted. A person who is not able to communicate in the local language will find it difficult to achieve targets. But the superiors are ignoring this fact while measuring the achievement of targets. Work pressure also increases in the absence of adequate staff in the branch. Incidentally, I have observed that there was about 20 to 25 employees in the branch where I have account. Now there are only less than 10 employees including the branch manager in this branch. Almost all the employees including the branch manager were ladies and on many days I had seen lights in the branch after 8 pm indicating that the staff were working inside the branch even after 8 pm. I wonder, what is the protection for these ladies where there are no security personnel to take care of their safety.

Recently, I had read a comment by the Honb’le Finance Minister Mrs. Nirmala Sita Raman advising parents to train their wards to cope up with pressure. While the parents have definitely then responsibility to train their kids to manage pressures in domestic life, I wonder, how can they train their sons or daughters to manage work pressures in offices, because many of them may be either illiterate or do not have knowledge of the work pattern in the offices where these young boys or girls are going to work. Is it not the responsibility of the organizations to give adequate training to a newly recruited employee before dumping all the works on him or her? Is it a healthy practice to ignore the health and mental conditions of an employee by the superiors? There are companies like Tatas who consider the employees as their asset and take care of their health and wellbeing.

There was a time when the banks were giving training to the newly recruited persons in all areas of their work. For this purpose they were posted in different branches and administrative offices during the initial one year so that they would get knowledge about all areas of the work they were expected to perform. I understand that there was a system of measuring training deficiency through the annual performance appraisal process in many banks. Some banks were giving training in behavioural areas too either by inviting expert guest faculty or sending them to other training institutions. Prof. Uday Pareekh and T. V Rao were conducting such behavioural training programmes. A few banks were having counselling cells and distressed persons were identified and were given counselling periodically.  I am doubtful about whether the banking system now follows a proper training mechanism for behavioural correction and support.

I am writing this now because I had read a direction from Central Government to take action against non-performing employees. Performance always need support and guidance from top management. I am afraid, the direction can be misused by bosses, if they do not like a subordinate. It is easy for a superior to build up cases and initiate action against a subordinate as also conceal the good performance by not reporting to higher authorities or recording in the service files.

Recently I happened to read an article by the renowned investment professional Warren Buffet. I would like to quote excerpts from his article here.

1. “The Over-Promisor: Buffett has consistently warned against CEOs making bold and specific earnings forecasts. Such behavior can pressure employees to deliver results at any cost, even if it means fudging numbers. A boss who consistently over-promises might cultivate a culture of short-termism and potentially unethical behavior.
2. The Ego-driven Leader: When ego becomes a driving factor, it can lead to misguided decisions. A boss whose decisions are heavily influenced by personal ego or the desire for personal recognition rather than the company’s good can be a red flag.
3. Poor Communicator: Communication is vital in leadership. Buffett illustrates with an example how even light-hearted comments can have unintended consequences. A boss who doesn’t communicate clearly or sends mixed messages can inadvertently lead the team astray.
4. The Short-Term Thinker: Buffett is known for his long-term investment strategy. Similarly, in leadership, focusing solely on short-term gains without a vision for the future can lead to instability and reactive decision-making. A boss who is always chasing the next quarter’s results at the expense of long-term growth might be one to approach cautiously.
5. Lack of Integrity: One of Buffett’s most famous quotes is, “It takes 20 years to build a reputation and five minutes to ruin it.” He values integrity immensely. A boss who cuts corners behaves unethically, or doesn’t uphold the values they preach is one Buffett would advise avoiding.
6. Inflexibility: While Buffett values sticking to one’s principles, he also recognizes the importance of adaptability. A boss unwilling to change or adapt, even when presented with new information or changing circumstances, can be detrimental to growth.
7. Lack of Value for Employees: Buffett believes in the value of his team and often credits his success to the people he works with. A boss who doesn’t value, respect, or treat their employees well is likely not one he’d endorse.” (https://www.newtraderu.com/2023/08/10/warren-buffett-watch-out-for-this-kind-of-boss/)  

In his teachings Warren Buffet has specifically highlighted traits such as integrity, long-term vision, clear communication, humility and adaptability as essential traits. I am doubtful of whether the senior officials of the banks possess any of these qualities. Interestingly I found that lady officers were more harassed by their lady bosses. Often personal ego plays greater role in taking decisions.

 Many actions are taken without conducting any enquiry and giving opportunity to the aggrieved person to explain his/her problems. Though the Internal Complaint Cells (ICCs) are constituted under the ICC Act 2013, and ICCs are constituted in banks, many are afraid of complaining because they might face with some penal action like transfer to an inconvenient location. As per Section 3 (2) (ii), (iii) and (iv) of the Act, implied or explicit threat of detrimental treatment in a woman’s employment, implied or explicit threat about her present or future employment status or interference with her work is a punishable offence. But how many women have complained about the ill-treatment received by them and how many actions are taken against the culprits? The current direction by the Central Government will be a tool in the hands of those who want to eliminate people whom they don’t like.

The academic institutions in Kerala are now worried that the number of students seeking admission is coming down every year, leading to the closure of some of them. It is a fact that the number of children going to other states or abroad after their schooling in Kerala is increasing every year. A report appeared in The Hindu dated June 14, 2024 shows that the number of students migrated has increased by about 100 per cent, from 129763 in 2018 to 2.25 lakhs in 2023. Though campus placement is there and students get placement offer from banks, many are not prepared to accept bank jobs because of high target oriented approach and unfavorable working conditions. In many banks HR department is functioning as Human Reprimand Department than Human Resources Department. Now The Central Government wanted banks to send monthly performance review of employees to them and prematurely retire who have completed 20 years of services or 50 years of age in the case of officers and 30 years of services or 55 years of age in the case of award staff who are found to be inefficient. The question is what are the parameters for deciding efficiency?  Even now many employees opt for voluntary retirement after completing the eligible period of service. The Central Government direction will definitely increase the vacancies in banks drastically. Many banks are experiencing staff shortage even now and the situation is going to be worse in the coming days.

 

Trade unions in banks were very strong till a few years back. But since now almost all the banking transaction have become online and only very few customers would be visiting the branches, the staff requirement also came down. Compared to pre-computerization period, presently the bargaining power of trade unions has come down drastically. Now there is no value for a strike because the customers have other methods for accessing to their bank and do the transactions. Only people earning daily wages and poorest of the poor depend on physical banking. Interestingly, in the latest Bipartite Settlement the trade union of bank employees and the bankers’ forum, a clause was added empowering the management to take action against non-performing employees. Hence the trade unions have now lost a chance to oppose the Central Government move.

 

Many senior citizens like me are depending on the interest earned on their life time savings kept on banks. Now I am afraid that the Central Government’s move will only help in destroying the banking sector as they have done to the public sector undertaking BSNL. As we all know many BSNL customers have shifted to other service operators because of poor connectivity and poor service. The new generation does not prefer bank jobs despite the high salary package. How the banks are going to fill up the vacancies arising out of premature retirement as directed by the Government and voluntary retirement by employees is a matter of concern under the present circumstance. The Times of India dated 29^th December 2024 carried a news item which highlighted the concern expressed by Reserve Bank of India on the rapidly increasing attrition rate in Private Sector Banks. According to the report of RBI, the attrition rate has risen sharply over the last three years to around 25 per cent. RBI said that the increasing turnover would result into significant operational risks, including disruptions in customer service and the loss if institutional knowledge. According to RBI “Banks need to implement strategies like improved onboarding processes, providing extensive training and carrier development opportunities, mentorship programs, competitive benefits and a supportive work place culture to build long-term employee engagement”. Contrary to this what is now happening in the banking sector is harassment and demotivation of officers. I think, RBI need to pay immediate attention to this aspect and ensure implementation of corrective steps.

 In the last Independence Day speech, our Honorable Prime Minister was speaking about Nari Sakthi and commitment of his government to protect women. I hope our Honorable Finance Minister is well aware about the role of a woman who is not only an employee, but is a wife, mother, daughter, granddaughter, and niece and holds heavy domestic responsibilities. We have National Women Commission and State Women Commissions, but none of these establishments could raise voice against the harassment received by the women employees and officers in banks. If the NWC or the Women’s welfare department of the Government conduct an independent study about the working conditions of women in banks, more stories of harassment in work place may be revealed. I am writing this article hoping that some authorities will read this and initiate some corrective action.