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Labour, stakeholders disagree on poaching, bonding in banks

By on June 24, 2013

Organised labour and shareholders have disagreed over the appropriateness of staff poaching and bonding in the banking industry. Under the umbrella of the Association of Senior Staff of Banks, Insurance and Financial Institutions, ASSBIFI, labour maintained that staff bonding is illegal and any agreement to that effect is not binding on the staff, shareholder groups however insist that such practices is good and will enhance competition among banks.

“It is   illegality, it is  morally wrong for employers to hold a worker down simply because the employer had trained the workers for six months or even a year”,   said Obukese Orere, General Secretary of ASSBIFI affiliated to Nigeria Labour Congress, NLC, Obukese Orere, on the issue of staff bonding. Boniface Okezie, National Chairman, Progressive Shareholders Association of Nigeria, PSAN, however insist “it is equally good. If a company spends time and money in training a staff and paying him good salary, then it will be good for such staff to work for the bank for certain period to justify the training and capacity development,”

The deregulation of the banking industry in the 1990s, prompted the entrant of many banks, who besieged the exiting banks, old generation banks, for experienced staff to run their operations. It was so pronounced that some staff hardly spends up to six months in a bank before moving to another one, and to higher designation. The trend was however halted by the consolidation exercise of 2006 and the banking crisis of 2009, which occasioned massive retrenchment of experienced staff in banks that could not make the new capital base and those that had to retrench in order to cut cost.

A human resource official in one of the banks, who pleaded anonymity, however told Vanguard that the practice still occurs in the industry. He said it all depends on the connection of the staff. Investigation revealed that unlike the pre-consolidation era when it was new generation banks that poached staff from old generation staff, the old generation banks are now the ones poaching from new generation banks.

The belief among banks’ staff is that the old generation banks offer more job security, and better remuneration. In addition to these is the existence of strong unions in old generation banks, which comes very handy when it comes to staff retrenchment, as revealed by the experience of their colleagues affected by the wave of retrenchment that swept through the industry between 2009 and 2010.

To checkmate this trend, some banks now insist new staff enter into bonding agreement before they are employed. Such agreement may stipulate that the new staff must work for the bank for a specific period, ranging from one to two years. This actually stemmed from the recommendations of the CBN in 2001, to address the problem of poaching in the industry.In a circular issued in 2001, the CBN said, “As the shortage of experienced personnel in the banking industry became more acute, banks have engaged all sorts of strategies to attract talented staff from rival institutions. Although poaching may not be considered bad by the affected staff because it represents a means of advancement, it has some negative consequences on the system as a whole.   Some of such identified consequences include, but are not limited to the following:

“Poaching if not properly checked can be injurious to the operations of the organisation that suffers the “brain drain” as it is left with the additional burden of having to recruit/retrain new staff. Added to this is the risk that critical information that may later be used as a competitive card may be taken from the organisation to the new one.

“Another major area of concern has been the reluctance of some banks to train their staff because of the constant threat of the staff leaving, after being sufficiently trained. Secondly, the institution may itself decide to be the predator by offering inducements to lure away personnel that have been trained by other institutions. Either way however, the industry is not the better for it, as capacity building is totally neglected.”

Consequently the CBN directed banks to, “Stem the tide of staff movement among banks to a reasonable degree by:   Setting and adhering to standards in the area of the qualification  and experience required for positions;   Bonding of staff trained to the institutions that sponsored such training for a number of years;   Ensuring that the movement of staff who have not met the set mini-mum number of years from one bank to another is on the same grade;   On the other hand, the managements of banks are advised to improve on their staff retention policies through job enrichment and   enhancement.”

But Orere, the General Secretary of ASSBIFI dismissed bonding as alien to labour laws. “There is no labour or employment law that supports this. Was it the employer that trained the employee from primary school to Polytechnic or University before the employer  saw him or her as worthy of employment?   The answer is no. It is a fundamental right of worker to chose either to stay or leave. So, because of unemployment situation in the country job seekers could do anything, but criminal to get employment. It is after the job is gotten, that all the anomalies are sorted.

“We all know that job is very scarce in the country and if employer because of his or her greed, decides to force an employee to sign a bond holding him or her down for at least two years,  the employer cannot prove anything legally should the employee decides to breach the so-called bond. In any case, we are not unaware of these things. But our position is that once an employee gets the job, for any reason, such employee decides to leave and the employer refuses because of the so-called bond, if such is brought to our notice, we know how to handle it”, he said.

Leaders of shareholder groups however disagree with the CBN and with labour. They opined that nether poaching or bonding is bad for the industry.

For Dr. Farouk Umar, Chairman, Advancement for Rights of Nigerian Shareholders, “Poaching of staff in the banking industry exists because some banks are not ready to train their staff,” said Dr. Farouk Umar, Chairman, Advancement for Rights of Nigerian Shareholders. When a staff is trained and well remunerated he will not want to leave his organisation for another. Beside money, staffs consider other things like growth, future of job, job satisfaction etc. In the case of staff bonding, we are in the era of competition.

“So employees are free to leave as they wish. However, if at the point of entry, there is an agreement that a staff after being trained must work for certain period before leaving, then the employees must maintain the term of employment. But if there is no such legal agreement at the point of entry then it would be unlawful for such bank to bond their staff”, he said

Mr Oderinde Taiwo, National Coordinator, Proactive Shareholders Association of Nigeria, PROSAN, agrees with Umar.   He said, “I think poaching is a very good development in the banking industry. It will encourage competition and thus raise the quality of service in the industry. It will encourage banks to train their staff and give them better incentive to discourage them from moving to other banks.

“Our banks are not well recapitalised when compared to other banks in advanced economy. If they are well capitalised, they should be able to train their staff and pay them well.   For some banks that are not ready to train then they should be ready to spend more money if they decide to poach staff from other banks. In the area of bonding, I think it is not the best for the industry. Staff should have the freedom to move to other places of work that attract them.”