European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.5, No.18, 2013 127 Reforms in the Nigerian Banking Sector and Strategies for Managing Human Resource Challenges Emeka E. Okafor* Department of Sociology, University of Ibadan, Ibadan, Nigeria * E-mail of the author: eemfor@yahoo.com; emeka.okafor@mail.ui.edu.ng Abstract The banking sector anywhere in the world occupies a very strategic position in the nation’s economy. Hence, instability in the sector is capable of creating perennial crises not only for the economy, but also for the workers in the sector. In Nigeria, the banking reforms that commenced in the sector since 2004 till date has thrown a lot of disengaged workers into the over bloated and saturated labour market with vary consequences even for the surviving ones. This paper reviews critically the reforms in the sector and the attendant human resource challenges. It argues that surviving workers who are not very certain about their future career path in the sector are facing a number of challenges with may scuttle and undermine the entire reform process. Using Neo- liberalism and Weberian Social Action as a theoretical guide, the paper examined a number of strategies that may be adopted in the sector to manage the surviving workers so that human element which is a very critical aspect of the banking reforms in Nigeria will not be compromised. Keywords: Bank reforms, Human resource, Retrenchment, Neo-liberalism, Surviving workers 1. Introduction Banking reforms in Nigeria which started in July, 2004 and climaxed in August 2009 and beyond has been the period of change that created and continues to create anxiety and concerns for workers in the banks. This is because on the long run they are at the receiving end. To many workers, the news of consolidation of banking sub-sector to the tune of N25billion may have been received with great apprehension. The reforms which took the form of merger and acquisition involved, downsizing, retrenchment, rationalisation, cost reduction programme, etc to enable the banks to remain afloat. For instance, a merger of one firm with another firm may likely create duplication of functions. The management may decide that instead of operating from two separate locations which are geographically so close, it will be economically wise to shut down some branches. Further, some banks that went to Stock Exchange to source funds, relegated the welfare and working conditions of workers to the background, while gearing all its efforts towards attracting any available funds they could muster to meet the target and deadline (Akanbi and Oso, 2005; Olaosebikan, 2006). This situation created some human resource challenges thereby making industrial relations in such banks a difficult and precarious one. It was on the basis of this situation that some management of banks became more authoritative in their approach to issues relating to human resource thus making banks in Nigeria to look lmore or less like slave camps where everything ‘human’ has been deprived of the employees in the sector in the pretense of managing the changes brought about by the reforms (Adeluyi, 2004; Balogun, Ademosu, Ojelu & Ebhomele, 2013). It is on record that the global financial meltdown that stared in 2007 made the second phase of reforms in Nigeria very imperative (Sanusi, 2010). In achieving the objective of bank reforms, quite a number of risk factors were involved both during and after reforms which have implications for human resource in the banking sector. The human risk factors included; down playing of workers welfare in merger and acquisition, dealing with employee resistance to change under the new reality, loss of job commitment, increasing use of non- standard workers, redundancy, and high employee turnover with concomitant loss of key talents, treating human capital as cost, pay imbalance and post merger misfits (Ugbaka, 2004; Adeyemi, 2005). Though the banking reforms has continued since the ones initiated in 2004 and 2009 respectively in the sector with its attendant consequences, however, there has been little real academic effort to critically investigate the human resource challenges created by the reforms and how the surviving workers could be managed to achieve the objectives of the reforms. 2. Problems of the Nigerian Banking Sector and need for Reforms There was a near consensus that certain prevailing factors abound in the Nigerian banking industry as at May 29, 1999 to justify the call for an overhaul of the sector in readiness for full blown reforms in the finance sector. The banking sector was one of the most vulnerable to a harvest of ruinous policies of successive military administrations (Odunuga, 2004; Akanbi & Oso, 2005; Olaosebikan, 2006). As at end-June 2004, there were 89 deposit money banks operating in Nigeria, comprising of institutions of various sizes and degree of soundness. In terms of structure, the sector was highly concentrated, as the 10 largest banks accounted for about 50 percent of the industry’s total assets/liabilities (ILO, 2004).