Challenges, Risks, and Issues in Human Resource Management 1 Challenges Defined

Challenges are problems which central banks are facing in HRM, particularly new problems due mainly to changes in economic environments influencing policies and functions of central banks. Many central banks set price stability and financial stability as their missions or objectives. However, recent economic environments, such as increasing turbulence in the financial market, and rising inflation, are threatening such missions or objectives. In these environments, it may become a big problem or challenge for HRM to support the achievement of the mission or objective, by identifying what kind of competencies are needed, by recruiting experts having needed competencies from the outside, by identifying more suitable experts internally, or by training the staff in such important fields.

Changes in economic environments influencing policies and functions of central banks may be different by central bank or by country. In a transition economy, for example, it may be new challenge to build or transform the capacity of human resources to be more suitable to the changing economic system by recruiting experts from outside, or by training the staff.

Accordingly, challenges are closely related to the mission, vision, objective or strategic plan of each central bank. It is important to identify what kind of challenges each central bank is facing in its economic environment.

4.2 Challenges in HRM at BSP

1. Adoption of a competency-based human resource system as an anchor for other human resource decisions and activities (Tison, 2008)

In view of the importance of competencies in human resource decision and activities in the Bank, priority was given to the profiling of mission-critical competencies. Competencies refer to a cluster of related knowledge, skills, and attitudes that affects a major part of one’s job and correlates with performance on

These competencies augment the minimum requirement for civil servants in performing a particular job as another dimension in recruitment and promotion of employees. Competencies also serve as bases for recruitment, promotion, training and development, performance review, and succession management, among many others.

As with other new tools and practices, challenges to be expected in competency profiling include learning and applying to a new technology, assigning the right staff to conduct profiling, eliciting the cooperation of departments and offices whose jobs will be profiled, and determining which office is mainly responsible for competency-based HR.

Presently, the managerial and leadership competencies have already been defined for the positions of manager, deputy director, director, managing director, assistant governor, and the deputy governor. The basic assessment tool for the possible successor to these positions has already been put in place.

In the case of non-managerial positions in the BSP, laying the implementation path for the following is needed:

• alignment of the performance evaluation system with the approved competencies, the results (i.e. performance ratings) of which it can be used as a basis for training and development, promotion, rewards and incentives, and succession and career management;

• development of career maps and paths for the various jobs in the BSP;

and

• development of competency-based job descriptions.

The next challenge is how to get the support, in terms of the commitment and involvement, of BSP’s middle and senior management (heads of departments, offices, subsectors, and sectors) in the succession management process. Their present areas of concern are on their active participation in identifying possible successors using the competency-based assessment tools, and openness to consider a wider choice of potential successors that may come from other departments and offices within the BSP as a result of the management and leadership competencies.

2. Fast turnover of young recruits due to migration/mobility for competitive job opportunities locally and abroad

Projections are that executive talent of the near future (2010) is Generation-Y;

gone are the baby-boomers and the leaders will come from the Y-ers. This is observable now as certain manifestations already begin to surface.

Top talents/high potential employees are especially marketable after they are hired by the BSP, owing to the technical and specialised functions for which they are trained and developed. The BSP invests so much on manpower training and development, given its advocacy for world-class quality.

High potential employees are likely to start competing for best positions in the various areas of the BSP as soon as they gain proficiency in their assigned jobs and look outside it for upward movement. Top talents always want to move up, get promoted, and get new titles. Such mobility can affect organisational success, if not contextualised in terms of established career path at the point of entry.

3. Knowledge Management Plan: knowledge duplication, retention, and nurturing are the challenges (Tison, 2008)

The BSP Institute is responsible for providing and facilitating training for the employees to acquire new knowledge and expand or enhance what is already known.

The BSP should have a knowledge management system for creating, capturing, using, and transferring knowledge to ensure organisational continuity and enhance its performance. This process is called knowledge management.

The BSP envisions itself as the experts with mission-critical central banking competencies. Employees leave through natural attrition or as the talent war becomes global. The greater challenge then is ensure that as they leave, their acquired collective knowledge and information remain in the BSP and be made accessible to those who stay and for the new recruits.

4. Strengthening the BSP’s capacity in strategic organisation development (Tison, 2008)

This will be accomplished through the following challenges or initiatives:

Development of a framework for culture building/culture change programs. The framework aims to help in the alignment of all BSP initiatives its core values and to ensure the promotion of BSP’s desired culture.

Organisation health survey (OHS). The objectives of the survey are to provide the baseline data for the existing organisational culture; indicate “where we are now” vis-à-vis “where we want to go”; determine the organisation for culture

Development of an ethics programme focused on the development of a Code of Ethical Standards for the BSP. The programme envisions to promote a prescribed norm of conduct and behaviour for all BSP employees. Its tone will be prescriptive, not punitive.

Guidelines on job rotation. The rotation of tasks and responsibilities has been proven as a development intervention in promoting excellence and dynamism in the workplace. It relieves demoralisation among employees.

Conduct of exit interviews with resigning and retiring BSP employees.

Information gathered will facilitate work conditions that retain employees.

4.3 Risks Defined

Risks are dangers which central banks may face when they operate the existing HRM system or introduce new HRM systems or ideas to cope with challenges. In the HRM side, there may a lot of risk, including wrong recruiting (recruiting by department or a bank as whole); inadequate training; rotation based staff movement; compensation-not based on performance; misguided motivation (encouraging the staff to learn in the way which is different from the mission, vision, objective or strategic plan of each central bank); gap between the needed and existing human being capacity or talent; wrong forecasting for the need of human resources in the medium and long-term (that may result in inappropriately slow promotion); and so on.

It is important to identify what kind of risks each central bank may face when they operate the existing HRM system or introduce new HRM systems or ideas to identify issues. For example, when a central bank recruits experts on the financial stability or on the price stability, there may be a danger that a central bank may recruit inappropriate person or less competent person. Another example is when a central bank trains the staff, the contents of training may be inappropriate when they want to introduce a too advanced system; thus, inadequate training problem may take place.

4.4 Risks in HRM at Bangko Sentral

1. Motivational fit of employees in relation to the challenges stated above.

It is hard to predict the aspirations and mindset of young recruits in as much as cross-cultural influences, generation gaps, and learning strategies would have differently evolved over time. There is a risk in assessing individuals only on the basis of academic credentials or technical ability.

2. External sourcing of top skills.

Hiring top talents more than home-grown talents could pose the risk of causing demoralisation or complacency on the part of equally talented insiders.

4.5 Issues Defined

It is important to identify what kind of issues each central bank should overcome to derive policy guidelines. Issues are tasks which central banks should do considering challenges and risks, such as how to support the mission, vision, objective or strategic plan of each central bank in the HRM side; how to recruit;

how to train; how to move or promote the staff; how to motivate; what kind of compensation system; how to fill the talent gap; and so forth.

4.5.1 Issues in HRM at BSP 1. Work-Family Life Balance.

With growing demands for younger technocrats and technical/technological experts, the zest for work-family life balance has become paramount, but achieving it has grown to be elusive for most career people. This is observable both among baby-boomers and the millennials. However, though this can be set aside in favour of work demands, it becomes counterproductive in the long term both to the person and the organisation.

2. Lack, if not absence, of transparency of supervisors in rating their staff.

Many employees complain that supervisors are not transparent in how they rate their staff during the annual performance appraisal under the guise of its being confidential in nature. For the employees, the present performance evaluation system of the BSP is only good on paper, because their ratings depend to a large extent on the arbitrary decision of their supervisors, who usually get instruction from the department heads. This has been the prevailing culture in the BSP despite the fact that the present performance evaluation system has undergone several revisions to be very objective and, thus, eliminate this culture of favoritism.