The execution gap cause #3: Poor HR alignment

“Many companies are struggling and under performing because the right people are occupying the wrong jobs, and vice-versa. Do a strategy redeployment matrix and see great results.”

The above is a simplified Teller reconciliation statement. There are days when a customer comes to the bank to withdraw money much more than what a particular Teller has in the float, in which case more money is requisitioned from the strong room. Regardless of this, reconciliation will be done as indicated above. At each end of day, the physical cash count balance (line 6) for each Teller must equal to the reconciled and expected balances (line 5).

In real banking, there is always a problem. It is a common in banks to find a Teller’s physical cash balance not tallying with the expected amount based on the records. Either it is over or short. The overage occurs where the Teller’s physical cash balance is higher than the book balance (Table 1, KES column). For example, if the Teller’s balance reconciled in Table 1 is KES 5,000. But their actual cash balance determined after a physical cash count in the presence of the teller is KES 5,100. There is an overage of KES 100. Like a shortage, an overage is not necessarily a good thing. Several things could have happened:

1. The opening balance could have been understated. This is a loss to a bank (or the bulk cashier) and it rarely happens. Such an omission calls for strengthening bulk Teller controls.
2. Daily deposits from customers could have been understated i.e. customers deposited KES 500 and Teller counted it and indicated KES 400 which the depositor (client) accepted or ignored by error. This mistake happens especially when it is deliberate by the Teller. The Teller could play a trick on the customer and indicate lower amounts. Such action falls under fraud of deposit by the Teller. This is a common occurrence and results into a direct loss to customer deposits and reputation risks to the financial institution. For this reason, banks are urged to create customer awareness on the vice by encouraging customers to always count the money in advance and not lose sight of the money until it is fully acknowledged by the Teller.

Cash shortages

This is when the Teller reports less cash than they are expected to report at the end of the day. In Table 1, the Teller is expected to have physical cash balance of Ugx. 3,000. But on counting, the cash at hand is revealed to be Ugx. 2,800. The Teller is said to be Ugx. 200 in the red. That is a shortage. Overstated withdrawals leading to shortages.

A client may enter a banking hall and present a Ugx 9,000,000 withdrawal cheque. But due to fatigue or boredom or any other related reason, the Teller issues out physical cash of Ugx 9,200,000. In effect, the Teller has at the end of the day closing balance of Ugx3,000,000 showing in the books when in reality the physical count balance is Ugx2,800,000. That gives Ugx. 200,000 cash shortage arising from an overpayment.

This loss is a direct cost to the bank. In that case, Teller may be made to refund the money in case the customer is traced and denies having received excess cash. In that case, the responsibility solely lies with the Teller.

Financial institutions have increased vigilance and controls to address this kind of fraud. In the past, Tellers would do it intentionally with their friends with whom they would later meet and share the lot. However, as a policy, most financial institutions now require the staff to pay. That way, there is no benefit for the cash shortage created.

Fixing cash shortages

I worked in a bank where cash shortages were a big problem. It took the managing director to say enough is enough. On 5th March 2013, the COE, a Kenyan, tall, dark skinned man called the senior management team (SMT), and asked the Head of Risk to join. He asked “Why do we have an increasing cash shortages problem? I cannot let this to continue.” He put turned to the head of Risk, and looking at him directly in his face said “Sir, I am giving you five days to explain what is causing high cash shortages and how to fix it. If you fail to give me the right answers, I want you to write justifying why we need you here in the bank.”

Scared for his job, the Head of Risk called the revenue assurance team and explained to them: “You have three days to explain why cash shortages are increasing week on week. If you don’t have answers by then bring in your resignation letter. I won’t have reasons to explain to my boss why I have you in my team.”

That is how the risk team approached us in internal audit department to help provide answers within two days! The first day on the job went by without any progress. On the second day, we did something different. We decided to collect all details of the cash shortages in the past five months. We obtained the cash shortage amount; the time details of the Teller who made the shortage; the branch location and the currencies involved. We also obtained a list of all Tellers and the profiles of those who were more meticulous and therefore had few shortages. We wanted to analyze the impact of level of education, experience and job satisfaction on cash shortages.

We entered all the data into MS Excel. We then interacted with the Human Resource Manager and obtained the academic qualifications stated on their personnel files.

We then mapped the staff skills, level of education and experience to the shortages made and the branch locations. This involved a thorough review of the profiles of the Tellers as well as one on one interviews including via phone calls for those located up-country as we were working against a tight schedule. The human resource deployment (HRD) assessment tool (developed by Summit Consulting Ltd) maps the qualifications, skills and experience of the staff to the job profile and benefits.

The findings were revealing but not conclusive. It was discovered that all Tellers who reported shortages were University graduates, with a Bachelors as a minimum qualification. On the other hand, great Tellers who reported few cases of shortages were diploma and or Advanced Level (A Level) holders.

We wondered why would a highly qualified person could be reckless with money? It was a puzzle we needed answers and quick, else our jobs were on the card.

The surprise findings

We set out to explore and understand better the behaviors of the Tellers at their counter. We asked and accessed the closed circuit television (CCTV) camera footage of selected Tellers doing their job. We selected those who did not make shortages, and those who made a lot of shortages. After viewing over 10 hours of footage, we finally hit the gold. We noticed three instances where a Teller who is Degree holder saw a client entering into the banking hall, she tried to hide their head by bending behind the Till so that the incoming client saw their Till as empty and therefore crosses to the next line handled by another Teller. However, when the client insisted to stay on the line, he called the Teller by name and it was clear to us that the Teller knew the client and vice-versa. So, why would a Teller try to hide from a buddy client?

On the other hand, Diploma and Advanced level leavers were proud doing the job of a Teller. They were focused, sat straight and always wore smiles. It was a total contrast between the two groups that any one analyzing those 30+ hours videos, who see the stark difference in enthusiasm for the jobs between the degree holders looked underemployed and demotivated and the diploma holders who looked very fortunate to have a job.

We extracted the video clipping and went with our heads high to the Senior Management Team. We had got it.

We recommended that going forward, Diploma and “A” level holders should be the preferred candidates for the Teller or Cashier jobs. As such jobs made better qualified candidates feel underemployed. They see such jobs as below their qualifications and look like career failures.

This clearly explains that when you get a less demanding job and recruit a highly qualified professional to do it, leads to boredom, lack of motivation, underemployment and a sense of job dissatisfaction. However, when you get a person holding a qualification slightly below the ideal requirements for the job, they put in their best. They give it their best shot. They want to prove to everyone that they can do it and even better.

The bank accepted our findings and recommendation. Since then the problem of cash shortages reduced by 70%, within the first six month. As you know the bank changed the recruitment policy gradually. But also kept some higher qualified staff to ensure that the Diploma holders had some degree of anxiety. And the belief that the job they hold requires a degree, but for them they are a special case.

The fact that ATMs, mobile banking (mobile banking apps and USSD apps) and Internet banking have not completely removed people from the banking halls, the problem of cash shortages is a reality for banks. As long as banks have to continue receiving deposits in cash, the problem will always be there.