The operations of the OCBC bank
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Published: Thu, 27 Apr 2017
»¿OCBC Bank has been operating in Malaysia for more than seven decades and today is one of the top 5 foreign banks in this country. It has a employee strength of over 4,000 staffs and a network of 29 conventional and 5 Islamic branches, offering ranges of specialist financial services that includes consumer, corporate, investment, premier and transaction banking, as well as global treasury services to meet the needs of its customers across the country.
This organization was built in 1912 and the 2nd largest services group of financial by assets in Southeast Asia. From credit rating of Aal received from Moody’s, it is the bank with among the world’s highest rated. OCBC Bank and its subsidiaries offer a various array of specialize finance services, ranging from consumer, corporate, investment, private and transaction banking to treasury, insurance, asset management and stock broking services.
This organization key market includes Malaysia, Singapore, Indonesia and China. It has 530 branches of network and agent offices worldwide including Bank OCBC NISP in Indonesia with 411 branches and offices.
The organization insurance subsidiary, Great Eastern Holdings, one of the biggest insurance companies in Malaysia and Singapore by assets, and its asset management subsidiary, Lion Global Investors, an asset management companies, 1 of the biggest in Southeast Asia.
This organization also, through its wholly-owned subsidiary, OCBC Al-Amin Bank Berhad offers Islamic banking products and services in Malaysia.
This organization offers thorough diversity among others such as innovative solution of financial and banking services in consumer banking, business, investment, global treasury, and investment management. The OCBC Group has various kinds of subsidiaries that are involved in financial future, insurance, asset management, regional stock broking, nominee, trustee and custodian services; hotel management and property development, in addition.
Type of Business Strategy
In the new millennium strategy announced in February 2003, there are 3 year plan to seek international growth through a transfer and build approach. A through balanced business scorecard approach, it target to build a high performance bank.
Seeking International Growth
This organization will strengthen its market position in 2 existing markets of Malaysia and Singapore and use as a platform of product solutions and business model to transfer to other ASEAN countries and particularly China. The organization target is to establish an existence in a 3rd country in 2005 and be prepared to increase to another country by 2006.
Building a high performance bank
This organization target is to expand SME customer and their consumer to become a Top 3 SME and consumer bank in Malaysia and Singapore market by 2005.
This organization will build their consumer and financial loans books prudently and continually to improve the credit processing to endure a vigorous credit rating and portfolio.
This organization will build the best in its class products and will target 15% revenue contribution from new products yearly. In the combination Malaysia and Singapore market, the bank target to be Top 3 in transaction banking, wealth management, investment and treasury banking.
The Bank is aiming to achieve growth yearly by 10% earnings per share, payout of 25% for core earnings as a minimum dividend, and ROE of 12% by 2005. The bank will quest to swap core financial services accretion opportunities for non-core asset and through share buyback programmed to return excess capital to shareholders.
The Bank will seek at least 30% of bank employees as a shareholder by 2005 to develop and foster human capital.
The Bank will improve the cross functional processes to lower the bank unit costs and become a low service provider and be more efficient.
Roles of Human Resource Department
HR is always looking for outstanding individuals to join the organization team in building a high performance bank.
The Bank provide employee with satisfaction and challenging occasion and compose a positive working environment that support and help realize employee potential.
Human Resources are a philosophy that cultivates the individual by recognizing employee unique worth and integrity. OCBC embody the shared values of treating each people with the respect and support one another to achieve the organization goals.
In the process, the bank recognizes, identify and reward talent for outstanding performance.
OCBC Bank offer:
Competitive Remuneration Package
Benefit Program and Flexible Lifestyle
Comprehensive Training Program
Program of Equity Ownership
Functional Exposure and Cross Border Exposure
Education Schemes Continuation
Analysis of the Business Strategies Adopted by an Organization
The organization has a influential presence in the consumer and business banking segments in Malaysia and Singapore. In term of market and assets share, Great Eastern Holdings, its insurance subsidiary is the biggest insurance group in Malaysia and Singapore.
The bank’s main banking such as deposits and loans operations has been exhibiting modest growth for year ending in 2007 for the last five. Loans registered a Compound Annual Growth Rate (CAGR) of 15.6% over 2003 to touch RM47.36 billion in 2007. Similarly, deposits registered a Compound Annual Growth Rate (CARG) of 13.52% over 2003 to touch RM58.96 billion in 2007. Since 2003, the Bank’s Non Performing Loans (NPL) has been prolonged decreasing. The bank’s Non Performing Loans drop from RM2, 546 million in 2006 to RM899 million in 2007. In 2008, OCBC Bank reported a 4% drop in net profit to RM622 million for the 1st quarter, mainly due to US sub-prime exposure on assets mortgage.
OCBC Bank will make their customer feel like they having a personalized experience and personal relationship when they speak to the bank staff can improve the customers bank satisfactory.
Research show that the customers do not trust the bank and are disgruntled because of longer waiting time while using the phone banking, waiting for number to be call for services at the counter, queuing at the Banks machines and other banking fees are some of the reasons. The bank should aim for what aspects of their business need to be improved and improvised for them to be better.
By looking at the competitors of other business service provider, the bank should take initiative to learn from the best. The customer care is a great way to influence the customer business relationship in longer term.
OCBC Bank is evolving to a higher stage management of risk approaches and techniques than had been in place before. As this study indicates, there is a lot more significant improvement can be done. It is worthwhile to repeat to an earlier point before the areas of potential value added are put onto consideration. The techniques used by corporation at the higher end of the market, the risk management techniques reviewed here are not the medium. Less sophisticated ones, the risk management approaches are less precise and significantly less analytic techniques used by firms at the higher end of the market. The risk management approaches at smaller institutions, as well as larger. In some cases they would need plenty of upgrading to reach the level of those reported here. Nonetheless, the techniques employed by those that define the industry standard could use some progress. Where analytic work would be ideal are listed below by category are recommended:
Interest/Profit Rate Risk
Foreign Exchange Risk
The Bank’s customer and consumer banking thrust will centralize on distribution, product and portfolio management, customer engagement and expense control. In striving for a stronger distribution network, they will continue to focus on the productivity and redeployment of their sales force via a multi-channel distribution model and mobilize alternative channels and business partners to expand customer reach. To better manage of the products and portfolio, it will be even more critical about consumer product relevance with the goal of owning targeted segments and categories, innovate on product bundling, seeking opportunities for new fee-based income opportunities. It will move ahead with the branch transformation initiative to enhance customer experience, redefine and refine the business and customer engagement model to achieve higher product penetration and cross selling successes, leverage on the call centre capability, and enhance value proposition to focus on banking convenience to capture market share in the mass affluent segment. In view of the unfavorable economic climate, several expense controls measures would be put in place, including tightening management of direct expenses, assembling a task force to seek out expense-saving opportunities, working with business partners to optimize marketing and promotional spend, and spending smartly on new business investments and opportunities.
The bank shareholder value (SV) is one part of its capitalization that is equity as opposed to long-term debt. This would more or less be the number of important shares times current share price, in case of only one type of stock. Things like dividends enhance shareholder value while issuing of shares lower it. To be comparing to average and required increased in cost of capital or value, this shareholder values should be added.
Under value based management also known as management principle, stated that is should first consider the interest of the shareholders in judgment off the business, although it is the legal premises of the bank that is build into.
It is hard influence the shareholder value by any manager. Usually, so called value drivers are divided into a few components. 7 drivers of shareholder value are widely used as a model to give some guidance to the managers:
Tax Rate Cash
Working Capital Investment
Capital Expenditure Incremental
Advantage Period of Competitive
In its effort towards shifting to a knowledge-based employee, OCBC main responsibility lies with the development of human and intellectual capital to produce adequate supply of, support and sustain a flexible, agile, and mobile workforce with relevant knowledge and skills. One important if not the most important variable of human capital is education and training which can be measured in several ways including expenditure on education and training, expenditure on education and training as a representative of human capital variable is significantly related to economic growth variable represented by Growth Domestic Product.
OCBC Bank’s payment and e-banking operations has an impressively low staff turnover rate of 3% to 4% yearly.
The management always keeps track of the employees’ overtime claims, as the bank believes in work-life balance to keep worker satisfied. It’s also ensuring the company structure is enduring in putting the employee, process and technology together.
OCBC Banks offer various channels to access into customers banking and other services:
ATM – also known as Auto Teller Machine that dispenses cash. Some ATMs provide additional services such as bill payment, fund transfer, account checking and etc.
CDM/CIM – also known as Cash Deposit Machine/Cash In Machine that accepts cash for account deposit, bills payment and etc.
Call center – for banking services enquiries.
Mail – Receive and sending cheques or cheque books, bank statement etc. thru normal post.
Phone banking – by using hand phone to conduct banking transactions such as account enquiry and etc
Online banking – internet usage used for performing transactions, payments etc.
Relationship Managers – RM’s will monitor for private banking or business banking customer that attached to them and providing the customers with personalized services.
Evaluation of the roles played by the company’s HRD to support the business strategies
For HR to play significant role in business strategy, it must focus on longer term of implications of HR related issues. It requires high level of professional and business knowledge.
1. Improving Organizational Performance
It can be seen in how effectively the product and services of the bank are delivered to the customers. The department design, produce and delivers skill employee for those services.
2. Strategic Planning Involvement
Human resource must be viewed in the same context as others managing department in the bank. For instance, the strategic planning for opening more numbers of branches in new areas, HR will provide the information on workforce availability and pay rates for each of the areas recommended consistence with the financial plans being considered.
3. Mergers, Acquisitions, and Downsizing on Decision Making
In many organizations today, banks are merging with or acquiring other firms. All of these mergers and acquisitions numerous HR issues are associated with combining organizational cultures and operations related.
4. Organizations and Work Process Redesigning
The bank structure follows strategic planning such as Al-Amin branches which the implications on how work is divided into jobs which drives toward its strategic plans and goals. Human Resource must work together with operating executives and managers to analyze and understand the strengths and weakness and must be able to revise the organization and its components.
5. HR Results for Ensuring Financial Accountability
A final part of the HR management link to bank performance is to demonstrate on a continuing basis that HR activities and efforts contribute to the financial results of the bank.
Recommendation: suggestions for improvement of HRD
1. The bigger picture
The business strategy of understanding:
The key of driving forces of the business should be highlighted. What type are they? (Competition, distribution, market and technology.)
The indication of power for moving the people side of the business. What are they?
The bottom line of business performance from the contribution of the people. What is the fundamental?
2. Statement of Intent or Mission Statement
The people that relates back to the business side:
Don’t be put off by negative reactions to idealistic statements for words or references – the actual process by thinking through the importance issues in formal and explicit manners.
What do the people contribute?
3. Do a SWOT analysis for the organization
Concentrate on the inside strengths and weaknesses of every employees.
Take into consideration on the current capability and expertise issues.
Highlight the opportunities and menaces relating to the employee side of the business. Strongly research the market environment and external business.
What might have an impact have on business performance?
Take into considering the skill shortages?
The impact on new technology and staffing levels?
From this analysis, review the capability of the Human Resource department. Run a complete SWOT analysis on the department – consider in detail the department’s service phase, operation of current areas and staff competency.
4. Conduct a human resources analysis
Focus on the company COPS (culture, organization, people, HR systems)
Consider: What is your current level? What is your future planning?
Check the hollow space exists between the reality of currently situation and the future planning.
Exhaust the analysis of the four dimensions.
5. Enactive critical people issues
Look back and examine the business strategy and examine it against the COPS and SWOT analysis:
Identifying the critical employee’s issues namely that must be address and those which have direct impact on the delivery of business strategy.
Prioritized the critical employee issues. What will happen if employer fails to address them?
The organization should keep in mind on identifying and concentrating on the efforts and resources.
6. Develop consequences and solutions
Every critical issue will be highlighted the options for attenuation action to generate, create and elaborate – don’t go for the direct issues. It is an important step as frequently certain people will jump for the conclusion rather than challenge the existing judgment about the past and the way things have been done. Think about the consequences by taking multiple type of action.
Is it really needed for improving communications, training or pay? Consideration of the mix of Human Resource systems needed for the issues to be address.
The indication for the personnel and the business function, what are they?
It is likely to interpret the action plan into objective once you have worked out through the process. Human Resource System needed to be segregated into various area of:
Workers development and training
Development of management
Development of organization
Appraisal for performance
Reward for employee
Workers recruitment and selection
For accomplishment of the objective, targets and dates should be fixed. Create an action plan for importance issues.
7. Action Plans – The evaluation and implementation
For integrating employee training and career development, it is the ultimate purpose for developing the human resource strategy to ensure the main objective are set and mutually supportive for the payment and reward system are centralized.
By failure to provide opportunities of career and development opportunities to the employee, it’s only will frustrated the employee and there are only a very little benefit and value to the organization.
This assignment has reviewed the strategic roles play by Human Resource Department functions that offer and contribute the organizations – the development of workers expertise that is important to maximize business performance. Traditionally, Human Resource Department has been relied to play the role by guiding the organization in supporting the implementation of strategies. Although the supporting role of Human Resource Department is important for successful of operation in assuring the worker efficiency to meet present demanding performance, Human Resource Department can offer a greater strategic value as a key to determine the strategy of business. The central of information technology to business potential and success for sustainable competitive advantage through worker expertise have underscored the increasing strategic Human Resource Department value. Human Resource Department has become a key by allowing compulsion in strategies based on customized services, qualities and cost leadership, innovation of product and strategies based on global relocation of workforce skills.
In summary, to deliver worker strength of pure strategic value, the organization and the Human Resource Department together must accept a systemic perspective of Human Resource role and indicate the attributes strategic discussed in this assignment. These strategic attributes are reflected in Human Resource Department that: (a) demonstrate strategy capabilities; (b) performance based; and (c) responsive to the emergent nature of strategy.
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