In a major push to banking reforms in our country, the Government of India has recently announced a slew of HR autonomy incentives for the better performing banks. Differential pay structures, lateral entry, contract employment and perhaps performance-linked pay as a sub-component of the compensation structure may turn out to be a potent talent management instrument in public sector banks too.
While the debate on the merits of performance pay remains open and is contingent on an effective Performance Appraisal System being in place, the risks may be manageable if the performance management system is well designed and carefully implemented. Of course this is an area where bank managements need to design carefully calibrated institution-specific responses. Talent management is thus a broad mandate.