Pakistan Nib Bank Ltd

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I have selected the NIB bank Ltd. Pakistan for my research. It is the 7th largest bank of Pakistan in terms of branch network along with the highest paid up capital of Rs. 40.4 bn amongst all banks in Pakistan. It serves the customer range of 450,000 across Pakistan. In this report all the information is collected from the web. Nib Bank had successfully launched the new segment as "Salam Banking" in 2008, and in the beginning it was the most successful segment introduced by any bank in the history of Pakistan. The main objective of Nib Bank was to help financially the small businesses in almost all major and remote areas of Pakistan. But right after 2 years, it has faced tremendous down fall. The collection of installments of small loans becomes difficult to collect from the customers because of the economics recession in the country. Therefore the Bank has to reduce its expanses by the cost cutting therefore the higher management had decide to shot down this segment and should only focused on the collection of regular installments of the loans and bad debts. This step had affected the entire structure of the Bank and more than 2100 skilled employees had to leave their jobs some with extra benefits. Therefore Nib has to improve and restructured its structure to earn profit and to gain good market reputation.

Introduction:

Nib Bank has started its operations in Pakistan in October 2003 when all resources, liabilities, rights and responsibilities of the Ex-National Development Leasing Corporation (NDLC) and Pakistan progressions of IFIC Bank were joined with and into the Bank with a funded up investment of Rs.1.2bn. later in April 2004, the Pakistan processes of Credit Agricole Indosuez were also merged with and into NIB. In March 2005, the Temasek Holdings of Singapore picked up 25% shareholding in NIB Bank, from side to side Bugis Investments. This shareholding was further amplified to over 70% in June 2005 resulting an rise in NIB's paid up principal to Rs 3.4 bn. NIB Bank has since grown-up promptly from a beginning of 2 branches in 2003, to 45 in the 4th quarter of 2007, with a consistent increase in its effects and securities base. The lawful fusion of PICIC & PCBL into NIB took place on December 31, 2007, NIB has almost 4500 employees. The major services of Nib bank are Retail Banking, Transaction Banking, Small Medium Enterprises, Commercial Banking Group, Corporate and Investment Banking Group / Financial Institutions and Treasury of Capital Market Group.

Background and Organizational Strategic Change:

Indeed NIB Bank if the 7th largest Bank of Pakistan with respected Branch network, but there are few issue which may let it down further, here are many features which cause the decline in profit and in the entire structure of the Bank.

The Nib Bank had successfully launched the new Segment "Salam Banking" on 10th October, 2008, with 100 Salam Banking branches out 240 of total in 46 cities of Pakistan with more than 2500 employees. This segment was meant to provides the full range of financial services including deposits, loans, insurance and transactional products, but its major interest was providing the small loans on large scales to small businessmen who were not welcomes by other banks, indeed it was a great step and in the beginning it was pretty successful in small business loans. And Nib was offering unsecure loans to customers who were in business for last 3 to 5 years and holds good reputation in market. In the beginning of this segment, the sales of the Bank in small loans had reached to its peak, but the time came when it was uncountable for the bank to keep the pace to collect the installment from the existing customers. Later Bank has to close this segment to recover its money.

The Structural downfall of NIB Bank:

With the passage of time, Nib bank had faced the decline in sales and the layoffs occur and talented employees left to take positions in growing establishments. Also the resources of the bank had become harder to acquire and resulting the crisis had caused the organizational failure. Nib management had lost the interest in the recovery department.

Later it was uncontrollable for the new staff to collects the loan installments across the country, and then the higher Management had decided to close the sales of the Salaam Banking. After that in April 2010, higher management decided to close down this segment until with fresh start in the end of the following year, after the closure Bank had fired the extra staff of the Salam Segment across the country from 100 branches, more than 2100 employees had lost

their jobs. This step was cost cutting but it caused a bad influence on the Bank's reputation and as well as on its market shares. Also it was bad impact in the unemployment rate of the country. But in the meantime State Bank of Pakistan took strong action and did not let the Nib's Management to fire such a high number of skilled employees in such a way. So Nib had to pay extra benefits to those fired employees. Now it had to work hard to recover the loan installments and bad debts across the country. After the sudden downfall in April 2010, there is also decrease in the new loan booking volume. Therefore to continue the pace of work, the management has started the rehabilitation plan to recover all the installments of the loans from their regular customers. Now bank is totally focusing on the collection of its previous loans disbursed across the country in 100 branches.

Planning and Implementing the Strategic Change:

There is a need to make some changes in the line management and in the policy. Also need guideline to run the debt recovery department with the fresh start. The recover staff should be equipped with new style communication with clients who are not repaying or who are bankrupt.

Also there is no job security for the employees; there should be no pressure on employees that they will lose the jobs. Nib has a policy to pay increments quarterly and it is extra ordinary approach, and Sales & Marketing staff of the bank should be rewarded with incentives to boost the interest of work and loyalty with Organization. In this way Nib bank can recover its all bad debts and pending or delayed loan installments from 30% of its loan clients. The recovery staff should be young talented, target oriented. And management has to set targets for the individuals with high incentives. There are many factors which has affected the bank's entire structure from time to time, like the economic forces such as interest rates, the state of Pakistan and the economy, also the unemployment rate of the country mean while the Technological forces, the development of new production techniques and new information-processing equipment influence many aspects of organization's operations. On the other hand Political, ethical, and environmental forces has influence government policy toward organizations and their stakeholders.

The Resource Implications:

If the bank does not adopt the suitable changes in its structure, no matter how short will it take to crash down, and without proper decision and policies of the higher management. Here are few aspects need to focus by the Management,

Nib's Management need skilled employees who should be target and task oriented and if bank is unable finds such employees than it can face hard time.

Nib has to focus on collection of loans and bad debts and stream line process, recovering the loop holes in the previous structure which led to the failure, if unable to do so nothing will be encouraging.

New interventions required in the recovery department for the collection of bad debts. It's better to make an alliance with third party collection contract and also have some insurance coverage plans for bad debts.

There is also need to make changes in the loan plans, making it more attractive for the new customers.

Applying Tuckman's Team Change on Nib Bank:

Tuckman has published his Team change Theory in 1965 which is consist of 4 steps namely Forming, Storming, Norming and Performing model. This models best suits on Nib Bank to improve its team structure. The following are the four steps which can best describe the Team change In Nib Bank.

5.1 (Stage 1 Forming):

In Nib Bank, the teams has to depend on their managers for guidance and direction, the line managers and group heads has to create task for the teams, and all the tasks can be target oriented and best teams should awarded with incentives and bonuses.

The teams at Nib Bank should initially concern with their task. The team member's should behave independently. They may or can be motivated usually relatively uniformed of the issues or objectives of the team. So team members can show traits of uncertainty, and the team manager should bring team altogether ensuring that they trust each other and the ability to develop a working atmosphere.

5.2 (Stage 2 Storming):

The formed teams of Nib Bank can gains confidence in work and targets but still there is a fear of conflict and polarization and other issues. Therefore team individuals should show their own personalities as they confront each other's ideas and perspectives. And the team managers should guides and project their team through turbulent transition phase.

5.3 (Stage 3 Norming):

In Norming, the Nib Bank's team members should adjust their behaviour to other team members in good manner and they should develop agreements to make the joint team efforts in targets set by the management. They have to make good effort to solve their problems and to achieve group harmony and team managers should let the members to act in participative style.

5.4 (Stage 4 Performing):

In Performing, the Nib Teams structure should become the tool of task activates. And roles become flexible and functional and the group energy is channelled into the task. And the team is able to work as a unit as it gets the jobs done effectively and without inappropriate conflicts or the need for external supervision and the each individual of the team need to clear the understanding of what is required to them at a task level. And the team manager should let the team members to take most of the necessary decisions.

Maslow's Hierarchy of Needs as Individual Change:

In 1940-50's Abraham Maslow developed a Hierarchy of Needs models, it can help to understand the motivation, management training and personal development of the individuals at Nib Bank.

Biological and Physiological needs:

In Physiological needs, these are the basic human needs which motivate us to achieve them as soon as possible to satisfy our self, after they are fulfilled than one may think about the other issues.

6.2 Safety needs:

The employees of Nib Bank should have the protection from various elements, there should be aproper job security for each employee and the internal law and order of the bank's atmosphere and there must be proper policies and limits equally for each individual.

Belongingness and Love needs:

At Nib there should be regards and relationship between the other staff members and there must be a good relation among the rest of other so that the working atmosphere could be enjoyed by the others

Esteem needs:

At Nib, there should be achievement oriented culture among the individuals; they should work hard to get recognised or awarded as best in the entire country. And every work done should be finish with responsibility.

Self-Actualization needs: As an Nib's Individual the, he/she has to realize personal potential, self-fulfillment, seeking personal growth and gain experiences.

Kotter's' Eight steps:

Kotter has presented his research that follows 8 steps to help any organization, and at Nib Bank it can explained as follow.

7.1 Increase urgency: -

In Nib Bank the Management should hire the inspire employees who should be real and relevant to the job. And it has to focus and Identify potential threats, to develop scenarios showing what could happen in the future also need to request support from the customers and outside stakeholders for the betterment of the entire organization.

7.2 Build the guiding: -

In the next step Nib has to focus on this matter that it has to bring forward the right people with right emotional comments and perfects right mix of skills and ability and it also has to identify the the true leaders and managers for the strong structure.

7.3 Get the vision right: -

The Bank has to create the team structure and make a future vision for the future to make the most powerful strategy. It also has to determine the values that are the central to the change.

7.4 Communicate for buy-in: -

The Bank has to involve as many employees as possible, to communicate the essentials, simply, and to appeal and respond to employees' needs. Talk often about the change in the entire Bank and its vision. Bank also has to apply its vision in all aspects of the operations and also has to lead with examples.

7.5 Empower action: -

Further the Bank has to Remove obstacles, enable constructive feedback and lots of support from staff and also has to increase rewards and bonus and incentives for the best work force. And for more change its better for the bank to hire change leaders for better results.

7.6 Create short-term wins: -

The Nib Bank has to set small targets that easily achieved so that the aim and motivation can be set. And small and easy targets in the beginning are the best motivation approach for entire work force. And also need to rewards those who help to meet the targets.

7.7 Don't let up: -

Kotters argues that sometimes victory is declared too early and the change some times failed. After every win, analyze what went wrong and what needs improve. The Bank has to build momentum to achieve the change on every step can be helpful. And keep learning the experiences for keep making new changes.

7.8 Make change stick: -

Finally the Bank has to strengthen the value of successful change through recruitment, promotion and has to promote its successful change and discus the success stories it is also necessary that it has to continue the support the change and also the people who took part in the change to keep the pace.

The need of change in the current economic climate:

Nib Bank has to cover a long distance to overcome its economic and structural issues. It has to focus on its redesigned Organizational, Team and Individual change. To continue its pace it has to consider the behavioral approach to keep to attract the people and how to put people to achieve the desired results and to maximize the benefits and on other hand in team change, the Bank has to consider the basic needs of the teams and how to utilize the teams with the different targets from time to time. And as organizational change it has to consider that it has done suitable division of the teams and the individual to run the business so that each individual have the key objective for the betterment of banks economics situation.

Infect the change can be designed and planed and it can only work if well performed and controlled.

The value of Strategic Intervention Techniques AT Nib Bank:

Role Playing:

This is integral part for the Nib Bank for the training purpose that could be used to act out a realistic situation that involves individuals with purposes to enable participants handle a given situation on given circumstances.

9.2 Team Development:

The Team Development can also play an important role for the Nib Banks's structure in the form of designing the teams to fulfill the targets set by the management, this can also help the bank to set goals and priorities and analyze the way of work and the decision making process.

9.3 Survey Feedback:

"Must see feedbacks as a stimulus for action rather than a final statement". (Nadler, 1997:147-148)

This is very important step to be followed by the Bank regarding to its Change , in this process it has to gathered the information through personal interviews or survey questionnaires to analyzed the real facts observed from the results of the survey, and that it has to discus and share with its workforce. There is a chance that the feedback can be limited and or can be inspiring.

9.4 Inter-Group Problem-Solving:

The perfect way of the problem solving in the group, if the problem developed on the floor the join group discussion can solve the issue on the floor. In such discussion or meeting all members can discus the issues, so the healthy environment can flourish.

9.5 Process Consultation:

This is essential process to help the disputed teams like two or more teams having disputes; the process of consultation has the edge to solve the conflict and sharpens the sword of peace.

9.6 Management by Objective Approach:

The most splendid approach in Management by objectives is to seek to involve subordinates in the decision-making process. Its purpose is to ensure managerial value while solving interpersonal problems.

Change Management Strategy with Stakeholders:

It is natural that whenever change occurs in any organization, a lot of people involves in it from Managers, to Leaders, from general work force to external Stakeholder.

In Nib Bank the Stakeholders play an important role. They have the ability to influence the objectives and directions of the entire bank.

There are basically two types of stakeholders Internal Stakeholders and External Stakeholder.

10.1 Internal stakeholders:

Internal stakeholders have their own interests which they might follow e.g. managers might seek organisational growth over profits; employees seek high wages and favourable working conditions. Internal stakeholders can have negative power to impede the implementation of strategy and also these can threaten industrial action or can threaten to resign.

10.2 External Stakeholders:

In Nib Bank External stakeholders do not own or work with the Bank, but they still have an interest in the Bank's Structure. They can also be independent shareholders, government agencies e.g. State Bank of Pakistan.

Developing a change management strategy with stakeholders:

Nib Management has to avoid to applying any change at its own. It has to get together the internal and external Stakeholders. The most easy way to involve the Stakeholders in the change is having defined communication strategy and being and consistent about sharing information and also need to consider using a variety of media to reach people, and there is also need to support staff with training and opportunities to practice. The higher managements also have to listen and act on questions, feedback and concerns as well. And also has to celebrate ideas, achievements and successes. Infect there is also need to a clear reason for implementing change. There should be shared vision about what the change will achieve.

When developing strategies, consider the barriers to implementing change and cater for them within the strategy development. In this way it will be the most suitable and easy strategy to demonstrate the change in the organization.

Other Key Responsibilities for Nib Management:

Identify the change required

Decide the major disputes

Identify and evaluate the key stakeholders

Win the backing of key individuals

Identify the problems

Determine the mark of risk and the cost of change

Understand why change is resisted

Identify the need for change, identify current position, devise a suitable method

Develop a clear vision

Make it people clear about what a change contains and how they are involved in it

What is the proposed change

Why should we do it

What the major effects will be

How we can manage the change

Applicable Model of Change for Nib's Stakeholders:

In the need of hour, the higher Management of Nib has to put all interest on this step to involve all the stakeholders internal and external to plan and design the change in the Bank. Therefore Peter Senge has delivered in his famous "Fifth Discipline Fieldbook". It shows the different steps of participation and contribution in change routes,

13.1 Telling:

In Nib Bank the decisions about the change process should be taken on the highest managerial level. Stakeholders have only the choice of accepting the top-down plan. The Implementation of an entire change process from top-down leads to frustration and refusal of co-operation.

13.2 Selling:

Banks has to change the plans that are intended at top-level and stakeholders are invited to join in the change. On the other hand the upper management wants to hear a "yes", and the staff's wants to hear that they will keep their jobs. Therefore, the most will give a compliant "yes", which is not a safe option for promise.

13.3 Testing:

Nib Bank has to involve the stakeholders and asks for their comments. The management means to find out whether stakeholders support the change process or not? The Testing can be done on a limited scale, perhaps better to expand, to differentiate between illustration and leading, but could also concern the whole system. The vision remains as it is, but the way to reach the vision is subject to negotiations between the different stakeholder groups.

14.4 Consulting:

At this stage the Nib Management has to decide that the chosen appliance for a management that diagnoses that it cannot have possibly have all the answers. Accessing the stakeholders about the change supports the vision of change. However, such a procedure takes time and needs assurance at the top-level to correct early results.

Co-creating:

In the last step Nib Bank has to consider the vision mutually with stakeholders from the very start. It safeguards the highest step of ownership.

16. Measuring & monitoring Progress of the Change Process Nib Bank:

Implementing the change at the bank could be a big challenge for the Nib management. because the change always start from the single employees to the entire structure, because Nib Bank has to work hard to come over its organizational issue, the management has to consider all the internal and external stakeholders and keep them in contact and united with the bank, they need to be updated from all the issues and outcomes of the change in the Bank, whether the outcomes are positive or negative.

All the issues must be sorted out and also there is a need to explore the foundation of the problem to decide the solution, so that Bank Management can figure out what went wrong? And how Bank can retrieve the loan collection department? Because the bank has to collect its loan instalments that it has dispersed in the last 2 years, and also the bad debts of the Bank. Meanwhile there must be another plan how to implement the change at the Bank. There are more few issues bank has to consider for the long term strategy and change inside it. The employees should be awarded incentives and increments and there must be job security to all the staff. Because the Nib Bank can gain the loyalty of staff, if offers secures jobs. And the hiring must be fresh graduates with extra ordinary educational back grounds. And non-performers must be dismissed when they failed to show the good results. The targets ordinated job can be a good option in this way the employees will work hard to achieve the targets and to achieve good incentives. Nib Management need to implement total quality management and respect and cultural change in all directions, I think first they should conduct open debate later management has to finalize the change and plan to implement. It will be easy for both staff and management. Hare are few points that need to be considered by the Bank Management.

Gain livelihood of key decisions makers, enablers and stakeholders

Change approaches among employees who contract with customers

Obtain employees' obligation to making the deliberate plan work by

Involving them in the rights of the plan

Fulfilling them on the plans' attainment

Train staff - progress new skills that will add to the effective implementation of plans

17. Recommendation & Conclusion:

NIB Bank, a great financial institution, operating in Pakistan for last many years. As the requirement of growing banking sector it is necessary to set challenging and effective goals so as to become market leaders. The management style in NIB Bank is kind of participative management in which employees are given chance to share their ideas for decision making so the NIB Bank is utilizing its employees by getting different ideas from different employees this provides greater chances for getting better and innovative ideas. Not only this but from this activity employees feel motivated because they think they also have the authority in decision making process and they are also a part of an organization.

NIB Bank should offer training and development sessions for undergraduates. This will help NIB Bank in future while recruiting employees. Also the Customer retention is one of the main priorities for banks today. With the entry of new players and multiple channels, customers have become more discerning and less 'loyal' to banks. Given the various options, it is now possible to open a new account within minutes. Or for that matter shift accounts within a couple of hours. This makes it imperative that banks provide best levels of service to ensure customer satisfaction. So NIB bank should remain focused on continuous improvement. The number of allowances and perquisites for the employees should be increased to ensure that they put their body and soul in the jobs assigned to them. The fresh hiring should be made permanent so that they are secured of their future.

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