Habib Bank was the first commercial bank to be established in Pakistan. HBL started its operation in 1947 soon after independence. HBL is the largest bank and has 1450 branches across the country and have more than 5 million customers.
Habib bank started as a private bank but was nationalized in 1974 during Bhutto Era, but in 2004 it was purchased by Aga Khan Fund for Economic Development holding 51% shares where as 42.5% shares were kept with the government itself. In 2009 government wanted to privatize HBL and sold it to AKFED.
It has now become the most profitable bank in the country with annual profit of 15 billion US dollars. HBL first international branch was established in Colombo, Sri Lanka in 1951 and from then it international operation started to expand in countries like USA, Oman, Belgium Seychelles and Maldives and the Netherlands.
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Corporate Strategy of HBL:
Since from its inception the corporate level strategy of HBL has been changing with the need of times yet keep the goal to make profit not just for themselves but for their employees and other share holders and stake holders. Previously the corporate strategy of HBL was to flourish their employees as according to them employee are the assets of their organization but this was based on seniority based culture that those who has experience and stayed with the bank for longer term of periods will be promoted to higher level management and will enjoy most of rewards but now HBL has changed their corporate strategy from seniority based to "performance management"
Those who are high performers will stay with the bank and will enjoy rewards and top positions in the organization keeping the previous values intact that employees are the asset and as we belong to service industry to our employees have to such that they attract more and more customers and make customers loyal because in service industry the main thing is that how we serve our customers and how we can help our customers in every manner.
There are several strategic milestones which HBL has achieved through the period of 65 years the biggest milestone which HBL achieved is by passing the transformation stage and expanding it branches nationwide and becoming the biggest bank in Pakistan not in terms of revenue but having the most customers. This was only possible when HBL was acquired by AKFED and the overcoming all the challenges in this phase.
The biggest challenge which HBL had to face was launching a performance based culture despite of seniority base. For this purpose HBL had to layoff many employees who were actually a burden on HBL or who could create hurdles in implementation of performance based culture. They named the laying off of employees as right sizing.
What HBL Did?
HBL some extra incentives in terms of golden handshakes to senior manager who were burden on the bank.
To layoff middle level managers such as branch managers and other lower level employees they gave two months extra salary to them and give them notice to find a new job for themselves.
They outsourced clerical work to other firms which enabled to save huge amount of capital such as outsourced guard duties to security agencies
HBL wanted to have those employees which not only fosters for their own growth but also the growth of the organization along with theirs.
Human Resource Practices at HBL in Association with Corporate Strategy:
All the practices at HBL are aligned with the corporate strategy of HBL which is performance based. Following are the numerous strategic human resource management practices.
Recruitment & Selection:
Recruitment is done by the human resource department at HBL, but human resource manager is not directly involved in recruitment of lower level employees. HR department is only involved directly whenever there is a recruitment of top managers like DGM's. Recruitment process at HBL is.
Always on Time
Marked to Standard
They give ads in news papers and online websites for a particular position along with they make sure the specified skills are mentioned in the ad's which a potential must need to posses to make the job done. For lower level employees the skills which are needed like MBA in finance at minimum experience is not required for this position, but for middle level and top level managers they mostly need experience and the candidate must possess skills like intellectual ability, and also the candidate must be conscientious so that the manager can lead from the front
HBL also hires newly graduated students from different universities. They have a standard set of 6 universities from which they hire candidates (Management Trainees), the reason for hiring potential employees from these universities is that according to them these universities graduates have those required skill i.e. they are result oriented which aligns with their corporate strategy.
After the candidates are short listed according they are called for interview.
Interview for Lower Level Employees
The interview is mostly conducted by branch managers and they report to HR department about that particular candidate. In this HR is not directly involved in the interview process. These interviews are mostly panel based interviews, because they have to recruit that particular employee who has skills that are aligned with corporate strategy.
Interview for Middle and Upper Level Management:
The interview for upper level management is conducted by the human resource department and HRM managers and they see the specific set of skills in that employee. HR is directly involved in this interview because the hiring of these managers is very critical task and employee performance is based on such managers to great extent.
Training and Development:
Training of new employee i.e. orientation for new employee is an integral part of HR practices at HBL. They organize a welcome function in which they welcome to all the new employees to HBL and give those details of organization performance based culture and how much competitive one should be in order to be result oriented. This method not only beneficial for employers to gather all new employees at one platform and reduce time but also it is very beneficial for the individual employee as well, as the employee get familiarize with the top management of organization.
Training to New Employees:
HBL gives training to new employees in many ways like it give them class room trainings in which things are thought to new employees like how to comply with organization policies and what services to offer to clients and how to perform different work like desk work. Some particular training that HBL offers to every new employee are:
Opening of new account
Managing cash at the bank
Training to Current Employees:
Senior and already working employees are also given training at management schools when there is a need. Training is given
When HBL is launching new financial product.
When a new system is implemented in the organization like these days training how to operate Oracle system is given to those IT experts by ORACLE people themselves.
A new Customer service is launched by the bank and knowledge is given to all concerned employees about that product in order to serve customer in a better way and to be more productive.
Whenever there are any amendments made in banking laws HBL gives training to their employees so that its corporate image remains intact.
When employees are switched to new departments on the job training is given to that employee by his/ her supervisors so that the employee starts to perform his/her own assigned task and become productive.
The biggest challenge that HBL had to face initially was performance appraisals of employee. At HBL performance appraisals are conducted annually as it is nationwide bank and cannot conduct the performance appraisals semi annually. Performance appraisals of branch employees is conducted by their branch managers and they sent report to HR department which HR department review and if any of employee is not performing the HR department ask branch managers to take notice of that particular employee. In most cases the employee try to enhance his/ her performance if they don't they are laid off from HBL.
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Now HBL has launched a new performance appraisals system in coordination with ORACLE which will help HR department to conduct appraisals more efficiently. This system is capable of reviewing the performance of each employee on regular basis and will directly sent result to HR department i.e. full automation. The reason for launching this ORACLE system was not that they don't trust branch managers but was to reduce the burden on them and they can invest their more time on productive activities. Following are the certain criteria of appraisal.
Performance on the job
Growth of the department
Behavior with colleagues.
After analyzing the above mentioned criteria the employee are ranked accordingly and rewards are given to the best performers and assistance is given to those who don't meet the actual job standards
Rewards & Benefits:
Rewards and benefits HBL offers to employees are higher than market average, and this is amongst one of the reasons their employee are very much loyal to the organization and put their best effort into work in order to meet the corporate strategy formed by top management. They pay higher wages to their employees as compared to other organization in the industry.
The bank not only offers higher monetary incentives but is also provide benefits to their employees like.
The bank offer medical allowances to the employee not in serious condition but in general conditions as well. Whenever a person is suffering from any severe injury the bank sponsors his/her whole treatment up to 5 million PRK, The reason for this that they want to retain their top performers.
The bank gives special rewards i.e. monetary to those who are hafiz-ul-Quran. This policy of HBL is very unique and now becoming their competitive advantage.
Educational and Health Allowances:
HBL also sponsors the every educational and health expenses of employee family.
Every year through balloting procedure HBL sent it top rated employees to perform hajj and the whole expense of the hajj trip is bare by the bank
HBL also provide non monetary reward to their employees in a way that they respect their employees and recognize top performers in the dinner held by CBA which is labor union at HBL.
The human resource department of HBL understands the importance of succession planning, for this particular reason the human resource specialists are developing a succession planning framework. As mentioned earlier, the designations presently have been restructured from the traditional practice of seniority structure. For instance, Senior Vice President (SVP) has been divided into General Manager (Tier 2) and General Manager (Tier 1). Similarly, Vice President (VP) has been divided into Deputy General Manager (Tier 2) and Deputy General Manager (Tier 1). Tier 2 is superior to tier 1 for all designations.
Hence, the basic function of succession planning would be to foster that successor for a particular designation who is an immediate subordinate to the position for which succession is being planned. For instance, if succession planning is aimed for General Manager (Tier 1) then an employee who is Deputy General Manager (Tier 2) would be the prime focus for the human resource department.
HBL tries to align its human resource practices with its corporate Strategy and human resource department plays a vital role in achieving their strategic objective. The function of human HR department has been presented in this report. HBLs human resource department conducts job analysis by interviewing line managers who are working on particular positions. The personal observations also help HR representative to develop job description and job specification. Recruitment in HBL has two levels.
(1) Entry level position
(2) ExperiencedÂ professionals.
For entry level position campus hiring is used and also recruiting agency is given task to provide selected lot of candidates for final interview. The recruiting agency first give ad's in the newspapers regarding any particular job opening and then collect web based applications. After collecting resumes the agency short list the candidates and make a call to shortlisted candidates for test after that agency takes first interview itself and forward short listed candidates to the bank HR department for final level interview, the candidates are selected finally and job is offered. For top level management positions there are two ways to fill in the gap internally and externally. Internally is done by posting on their portal and candidates are filled via recommendations of their immediate supervisors. They mostly rely on internal hiring because these employees know the organization culture and they are already aligned with their strategic goals. The other way to hire top positions is to hire Performance appraisals are also conducted with the relevancy of the corporate strategy to check whether the employees are performing and keep them motivated. HBL believes in equal employment opportunity providers and also believe that the growth of organization is only possible if the employee of the bank is performing. BankÂ provides higher salary to its staff above the market average and many other benefits to them. Overall HBL is maintaining good human resource policy and looking successful in achieving its strategic objectives by aligning it's all strategies especially human resource department.
Company Information of MCB Bank Limited:
MCB bank is one the leading bank in Pakistan which was inaugurated in 1947; the bank has 65 years of vast banking experience. MCB bank is one of the most reputable banks in the industry and maintains a competitive edge among all its competitors. Currently the bank 8000 employees all over Pakistan and has 1130 branches nationwide. The yearly turnover of MCB bank is 4.62 billion dollars.
In 1974 with all other banks in the nation MCB to get nationalized and later in 1991 it got privatized by the government of Pakistan. It was the first bank which got privatized and was purchased by Nishat group. Since privatization MCB's growth is tremendous and today MCB has nearly 4.5 billion customers nationwide. It is the first Pakistani bank to start it operations in Sri Lanka and the first bank to introduce Global Depository Receipts in the year 2006. MCB has strategic foreign partnership with Maybank of Malaysia which holds 20% shares in MCB through its wholly owned subsidiary Mayban International Trust (Labuan) since 2008 MCB has international branches in Dubai, Bharain Azerbaijan, Hongkong.
To be the leading financial services provider, partnering with our customers for a more prosperous and secure future.
We are a team of committed professionals, providing innovative and efficient financial solutions to create and nurture long-term relationships with our customers. In doing so, we ensure that our shareholders can invest with confidence in us.
Corporate Strategy of MCB:
MCB has distributed its corporate strategy into 2 levels or two main purposes.
The primary corporate strategy of MCB is performance based i.e. result oriented means growth of organization along with growth of employees in the organization and for that purpose MCB has initiated all its upper and lower level strategies on their main purpose i.e. growth and performance.
The secondary level corporate strategy is global expansion of the bank, to become an international bank and to open in branches in the world which will enable them to generate foreign revenue and to provide best financial solutions to clients. MCB has aligned all divisions into one unit and implement a performance based culture throughout organization and make only those business level and functional strategies which supplements it corporate strategy.
Human Resource Practices at MCB in Association with Corporate Strategy:
The human resource functions which are strategically aligned to MCB's corporate strategy are recruitment and selection, training and development, and performance appraisals. However, the functions of rewards and benefits, and succession planning are not strategically compatible to the aforementioned corporate strategies. Hence, the human resource management department needs to take more appropriate measures in order to obtain effective results from strategically aligned rewards and benefits as well as succession planning.
Recruitment & Selection:
The recruitment and selection phase is streamlined with the corporate strategy, and to continually hire the potential candidates the human resource department follows an established mechanism in this regard. The main source of informing vacancies at MCB is job advertisement in the newspapers and employment websites (like rozee.pk) as well as posting the vacancy in the selected universities. However, candidates are compelled to apply through MCB's own web portal which is accessed on MCB's website.
There are two forms of hiring conducted at MCB, which are lateral and fresh hiring.
This form of hiring is conducted for an experienced candidate that is, if a vacancy for a management level comes up then lateral hiring is conducted. Moreover, the personality and skill requirements change with the designation so as the process of selecting a potential employee.
Fresh hiring at MCB is generally conducted for entry level position which is named as Trainee Business Officer (TBO). The testing phase entails a structured and transparent entry test conducted by National Testing Service (NTS). Previously, campus hiring was also conducted by MCB but it was discontinued around 2008 because of limited number of applicants from selected universities. This predicament of accessibility to a greater application pool has been addressed by utilization of web portal.
Furthermore, after the entry test the shortlisted candidates are assessed through the interview phase which contains three levels of assessment interviews. All the interviews are panel based. In the first assessment interview around 70 percent of the candidates are rejected. Furthermore, all the three phases of the assessment are nearly similar in their assessment criteria, however; the officials of the panel are different in each phase which means that, the designation of the interviewers appointed escalates as the phases proceed.
Training & Development:
MCB provides continuous training to it employees.
Orientation is a type to training which MCB provide it to new employee. Newly hired TBO's are given 3 months training, in which 45 days class room training is given at their staff collegiate present in 3 different cities i.e. Karachi, Islamabad and Lahore. At this collegiate new employee are given training about organization culture of MCB and also knowledge of banking sector and banking software present at MCB.
After that they are transferred at branches where they are actually performing the job and along with it assistance is given to them if they needed. HR function is to analysis the performance of each new employee for one year along with the concerned department critically because this enables them to find out who future potential leaders are and who has the initiate to take responsibility.
Training to Current Employees:
Training to current employees is given on regular basis if there is need arise. There are different types of training provided to employees like financial seminars and financial and other relevant courses at universities in order to provide extra knowledge to the employees, and this enables employees to assist the customer needs in a more professional way and provide knowledge to customers and provide solution to them as well.
Like in 2008 MCB bank implemented a new symbol software (banking software) in all of its branches, for this very purpose they give training to employee with the assistance of the software developer so that employees at the bank can operate the software.
The function of HR department is to launch training programs for employees in co-ordination with other departments where the training is needed.
Performance appraisals are conducted at MCB annually. These performances are conducted by the head of each department and then these appraisals report are sent to HR department for further evaluation. Performance appraisals are conducted on two bases i.e. whether employees are performing both the primary and secondary task.
Performance of Primary Task:
Primary task means performing that task as per you job description means either employee is performing those entire primary tasks which is liable to perform and for which he has been hired. Primary task are those tasks which employee has to perform as their core responsibility. For instance, the job responsibility of teller is to facilitate the customer of the bank in all possible manners as the corporate strategy of bank is to provide financial solutions in all manners.
Performance of Secondary Task:
Secondary task are those tasks which are additional to the job description of that particular employee. Secondary task are called additional because performance of those task will lead to positive appraisals. For Instance the responsibility to open a branch of bank lies to branch manager but if any lower level employee takes this responsibility which is not in his JD he will get positive appraisals from the branch manager which is then sent to HR department.
After performance appraisals are employees are ranked and rewards and monetary incentive are given to them.
Rewards and benefits:
The human resource department of MCB utilizes only monetary benefits like annual bonuses to reward their employees as to them the most sought out reward by an individual are usually monetary ones.
There is no formal succession planning initiative taken by the human resource department for any specific position. However, there is an informal procedure of succession planning through which an experienced employee acts as a mentor for the subordinates and when that experienced employee is retired than usually the replacement is the same subordinate.
As the corporate strategy of MCB is divided at two levels; growth & performance based and global expansion based which gives a more balanced structure to the organization. MCB's human resource activities have been neatly defined in this report. An established mechanism has been followed for the recruitment & selection process. Two forms of hiring are conducted at MCB, lateral hiring for experienced candidates and fresh hiring for Training Business Officer. MCB gives orientation to newly hired TBO's and financial seminars and relevant courses training from other universities to current employees, as to polish their employees' skills. Performance appraisals are also conducted with the relevancy of the corporate strategy to check whether the employees are performing at primary and secondary tasks efficiently, but appraisals are sliding more towards the completion of secondary tasks. As per the competitive market, rewards and benefits are given accordingly where monetary rewards and incentives highly recognized by individuals. Whereas MCB has an informal succession planning procedure and no initiative of formal succession planning has been taken by the human resource department for any particular position. All in all MCB has been successful to accomplish the goals of its corporate strategy throughout the 65 years of the banking experience but the loop holes can be filled with the further effective implementation of strategic human resource activities.
Comparison of Habib Bank Limited and MCB Bank Limited
Based on performance management
Based on performance and global expansion while keeping intact the focus of providing best solutions to the clients
Recruitment and Selection
Compatible to the performance oriented corporate strategy by the means of clearly established modes of advertising a vacancy, and defined interviewing criteria for different positions
Compatible to the corporate focus of providing the best solutions to the clients as candidates possessing relevant skills to the job are appointed
Training and Development
Orientation and training methods are appositely designed to accomplish the strategic goals of maintain the performance standards of the employees
Training programs are appropriately planned and implemented to assure that the corporate motives are met as per established targets
Performance appraisals are also streamlined to the corporate motives and are conducted on annual basis
Appraisals are performed on the basis of primary and secondary tasks performed by an employee on the basis of the defined job descriptions
Rewards and Benefits
Monetary as well as non-monetary rewards are provided to the employees so that the corporate aim of performance management can be achieved
The human resource department only focuses on monetary rewards which is not appropriate enough to meet the corporate strategy of global expansion as well as best solutions to the clients. Hence, non-monetary rewards must also be provided.
The human resource department is presently formulating a succession planning framework.
There is no formal succession planning framework in place, hence; a formal succession planning framework needs to be established to accomplish the corporate objectives