Building institutions with compassionate leadership is also crucial to retaining and nurturing talent
The RBI’s recent Report on Trend and Progress of Banking in India 2023-24 flags the critical issue of attrition in private and small finance banks. The report states employee attrition rates are as high as 25% in select private sector banks and small finance banks. Though the total number of employees in private sector banks has surpassed that of public sector banks during 2023-24, their attrition too has shot up sharply over the last three years. The report points out that the Reserve Bank has stressed that reducing attrition is not just a human resource function but a strategic imperative. Banks need to implement strategies such as improved onboarding processes, extensive training and career development opportunities and a supportive workplace culture to build long-term employee engagement. High attrition and employee turnover rates pose significant operational risks, including disruption in customer services, besides leading to loss of institutional knowledge and increased recruitment costs. Some time ago, RBI Deputy Governor Swaminathan J had said, “The attrition numbers are not merely statistics; they are indicators of deeper challenges in the bank’s approach to employee engagement and retention. If banks lose talented employees, especially at the junior and frontline levels, you are not just losing people — you are losing experience, customer relationships and operational continuity.”
It may be true that high attrition levels are largely at the lower end, and this trend is seen not just in banks but across sectors. Is this the only problem and where does the buck stop? In many cases, employees move on not because of pay but because of a toxic atmosphere and bad bosses. How do we make workplaces supportive and make employees feel valued when leadership puts profit before people and does not rethink strategies even when the exit pipeline is overflowing? Do we have compassionate leadership and are we doing enough to retain employees? Are we forgetting that we are dealing with humans in our pursuit of growth and profit? And at what costs do we want to better margins? The situation is such that even a reticent regulator flags it; prioritising employee stability, laying foundations for long-term growth and building institutions that not just attract and retain talent but also nurture it for future leadership roles is critical. We also need to ensure that those who are appointed to helm a business have empathy. Hard work matters, as Infosys co-founder NR Narayana Murthy says, but if young professionals give their all “to ensure the country’s competitive edge on the global stage”, it also the duty of the leader to shun biases and reward their performance, so that these young professionals, live with their heads held high rather than in constant fear. Are the bosses listening and is also the voice reaching those who select these bosses and keep backing them?
