Abstract
This study examines the implications of the Voluntary Retirement Scheme (VRS) implemented by Indian public sector banks, specifically focusing on the State Bank of Indore. Introduced to enhance cost efficiency, operational productivity, and competitiveness within the banking sector, the VRS aimed to streamline human resources in response to increased pressures from economic liberalization and globalization. The research investigates VRS`s effects on profitability, productivity, and human resource optimization, as well as its psychological impact on employees who either accepted or declined the offer. The study evaluates shifts in financial performance metrics such as business and profit per employee and examines changes in HR management strategies, including policy development, employee acquisition, and organizational restructuring. Further, it explores the psychological responses among "survivors," or remaining employees, addressing factors like morale, loyalty, and stress levels. Using paired t-tests, regression, and factor analysis, this research assesses VRS`s success in achieving its intended goals and provides insights into how HR strategies can be optimized for improved efficiency in a competitive, liberalized economy. Findings contribute to understanding the broader impact of VRS on workforce dynamics and organizational health within the public banking sector.
Key-Words / Index Term
Voluntary Retirement Scheme (VRS), Organizational Restructuring, Employee Morale, Employee Loyalty, Employee Stress, Survivor Employees, Paired t-test, Regression Analysis. Factor Analysis, Banking Sector, Workforce Dynamics, Organizational Health
References
[1] Appelbaum, S. H., Delage, C., Labib, N., & Gault, G. The survivor syndrome: Aftermath of downsizing. Career Development International, 2(6), pp.278–286, 1997.
[2] Armstrong-Stassen, M., Downsizing the federal government: A longitudinal study of managers` reactions. Revue Canadienne des Sciences Administratives, 15(3), pp.312–323, 1998.
[3] Ballabh, J., Unleashing employee productivity: Need for a paradigm shift. IBA Bulletin, pp.7–9, 2002.
[4] Bedian, A. G., & Armenakis, A. A. The cesspool syndrome: How dreck floats to the top of declining organizations. The Academy of Management Executive, 12(1), pp.58–67, 1998.
[5] Bhattacharya, B. P., Post VRS scenario human resource development: Role of training. IBA Bulletin, pp.96–102, 2002.
[6] Budros, A., A conceptual framework for analyzing why organizations downsize. Organization Science, 10(1), pp.69–84, 1999.
[7] Bruton, G. D., Keels, J. K., & Shook, C. L., Downsizing the firm: Answering the strategic questions. The Academy of Management Executive, 10(2), pp.38–43, 1996.
[8] Bowman, E. H., & Singh, H., Corporate restructuring, organizational change, and market reactions. Strategic Management Journal, 14(Special Issue), pp.5–14, 1993.
[9] Cameron, K. S., Strategies for successful organizational downsizing. Human Resource Management, 33(2), pp.189–211, 1994.
[10] Cameron, K. S., Freeman, S. J., & Mishra, A. K., Best practices in white-collar downsizing: Managing contradictions. Academy of Management Executive, 5(3), pp.57–73, 1991.
[11] Cascio, W. F., Young, C. E., & Morris, J. R., Financial consequences of employment-change decisions in major U.S. corporations. Academy of Management Journal, 40(5), pp.1175–1189, 1997.
[12] Cascio, W. F., Downsizing: What do we know? What have we learned? The Academy of Management Executive, 7(1), pp.95–104, 1993.
[13] Chatterji, L., & Bhattacharya, S., Implementation of downsizing: Issues and consequences. Management Review, 13(2), pp.21–29, 2001.
[14] Davidson, N., Wallace, D. L., Worrell, D. L., & Fox, J. B. (1996). Early retirement programs and firm performance. Academy of Management Journal, 39(4), 970–984.
[15] De Meuse, K. P., Vanderheiden, D., & Bergmann, T. (1994). Announced layoffs: Their effect on corporate financial performance. Human Resource Management Journal, 33(4), 509–530.
[16] Dewitt, R. L. (1998). Firm, industry, and strategy influences on choice of downsizing approaches. Strategic Management Journal, 19(1), 59–79.
[17] Dewitt, R. L., Harrigan, K. R., & Newman, W. H. (1998). Downsizing strategically in foster. In L.A.W. (Ed.), Advances in Applied Business Strategy (Vol. 5, pp. 21–36). JAI Press.
[18] Enshoff, J. R. (1994). How to increase employee loyalty while you downsize. Business Horizons, 37(2), 49–57.
[19] Floyd, S. W., & Wooldridge, B. (1994). Dinosaurs or dynamos? Recognizing middle management`s strategic role. The Academy of Management Executive, 8(4), 47–54.
[20] Frost, P., & Robinson, S. The toxic handler: Organization hero and casualty. Harvard Business Review, 77(4), 1999.
[21] Freeman, S. J. The gestalt of organizational downsizing: Downsizing strategies as a package of change. Human Relations, 52(12), 1504–1541, 1999.
[22] Gandolfi, F. How do organizations implement downsizing? An Australian and New Zealand study. Contemporary Management Research, 1(1), 57–68, 2005.
[23] Ghosh, R. N. The globalization process and economic liberalization in India: Lessons from classical economics. Department of Economics, The University of Western Australia, 1999.
[24] Goyal, S. K., Privatization in India. Asian Development Bank, 2001.
[25] Yadav, R., & Singh, M., VRS impact on productivity and profitability of public sector banks – A comparative study of State Bank of India and State Bank of Indore pre and post VRS. Review of Business and Technology Research, 4(1), pp.1-9, 2011. doi: 10.1016/j.rbt.2011.07.001
[26] Yadav, R., Retirement strategies in banks (Road map for future success using retrenchment strategy). Proceedings of the National Conference at Manipal, May pp.27-29, 2007.
[27] Vyas, R. K., Singh, M., & Yadav, R., The impact of capital adequacy requirement on performance of scheduled commercial banks. Asia Pacific Business Review, 4(2), pp.74-81, 2008.
[28] Yadav, R., & Vyas, R. K., Critical appraisal of voluntary retirement scheme (VRS) in public sector banks (with special reference to State Bank of Indore) (Ph.D. thesis). Devi Ahilya University Indore, 2012.
