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It is the organized study of the organization which deals with the structure of formal organization. A formal organization is the one which is created with the definite measures of authority and responsibility. Different theorists considered the organization as goal fulfilling machine and the productivity can be improve by improving the efficiency of the workers.
Features of Classical theory
Control of workers: Each and every employee in organization must be strictly controlled to see whether the worker is doing his job on a proper way or not, before the employee get start with his he must be well guided and then he must be controlled while he is on his job.
Chain of Command: All the employees within the organization must report to only one supervisor, all the authority is with only one person, no one else within the organization has the right to make any decision and all the work done by the employees must be reported to one supervisor.
Fayol's Administrative Theory
It is defined by Henry Fayol which describes the management process by the managers. It describes that the workers must be motivated by the managers more then they get motivated by money, there must be a well respect present for managers from the workers, and every worker must be equally treated, there must not be any discrimination by gender, religion, race, etc.
Fayol's management principles are as follows;
Fayol's Management Principles
Division of Work: Fayol's finding says that repetition of work brings specialization, speed and accuracy which may result in increase in productivity. As if an employee do the same job all the time long finally he becomes a specialize worker for a specific task.
Authority and Responsibility: Authority is defined as the right to give orders, and such authority is with the managers or supervisors who interact with their employees and need them report the manager by the last day and ask the manager for any change in organization and any decision making.
Discipline: It is very important for a successful running business. it brings mutual understanding between the employees and the manager.
Order: In any organization boss orders the subordinates and the subordinates follow the same given order in the best possible way.
Unity of Direction: In organization there is always one head and one plan for the business towards the same goal. Everyone must put their efforts to achieve the organization goal efficiently.
Unity of Command: An employee should receive orders from supervisor otherwise there will be a conflict between the subordinates and the managers.
Centralization: Element centralization must always be present.
Scalar Chain: it is a line of authority in which the employees are allowed to take decision on routine base problems or matters rather than hierarchal organization.
Equity: Every employee in organization must be treated equally and fairly.
Stability of Tenure: Every employee want to come with their best, so the employees need some time to become stable so that they can come up with their best for organization.
Remuneration: Means employees will be rewarded for their good efforts and must be encouraged well for their best achievement so that they become more productive.
Subordination of Individual Interest to General Interest: The individual interest must be the same as the interest in general towards the organization. There must be no difference in individual's interest for the organization.
Initiative: Fayol encourage managers to let the workers find solution for the day to day problems they face while their production process.
Esprit de Corps: Fayol recognized the importance of cohesiveness and team spirit to keep moral high. (vBulletin Solution.Inc, 2012)
Scientific Management Theory
It is defined by FW Taylor as the study of the relationship between the people and the task for the intention of redesigning the employment practice for higher efficiency. Scientific management theory is about providing good working conditions to workers, each worker must be well trained before he get start with a specific job and must be guided about how to do the job, each worker must be supervised to check whether the workers are doing their jobs in a best possible way or not. Some elements of scientific management theory are as follows;
Elements of Scientific Management Theory
Time: Every task must be properly designed and instruct workers to get done with the job in a given specific time period, every worker must be given a timeframe for their jobs and every employee must report the manager regarding the job by the last day.
Selection and Training: Those candidates must be selected by the organization who meets the organization's requirements, and as the employee is being selected he must be well trained about the job so that he do the job or come over the job in a best possible way.
Division of Work: A manager is responsible to divide the work among the workers and instruct each and every worker to go on with their jobs, if there is big organization with lots of employees and every employee is responsible for their specific job then instead of doing the same job again and again the manager should rotate their job after every specific time period so that the employees will not get bored with job and become more productive.
Authority and Responsibility: In a scientific management theory there is always only one boss who passes the authority and only the boss can take the decisions. The manager or the boss passes authority to employees for a specific job and gave them a timeframe, then the worker is responsible for that specific job to complete it and report to the boss or the manager.
Problems with Scientific Management Theory
Managers always focus on increase productivity side due to which the quality of products can compromise, as there is division of work every employee is responsible for a specific task and do not help each other during production process.
Employees are bound with the same task and they do repeat the same task again and again due to which workers gets bore and they get de motivated, sometimes in some organizations employees decides to leave the job as they get bore by doing the same task again and again.
Workers sometime get underperform and do not care about the product and quality which can be very bad for organization's image or brand name of their product because if employees gets underperform the quality can be definitely compromised.
Behavioral Management Theory
It is the study of how managers should motivate employees, encourage them and make them more productive to achieve organizational goals. Managers are the main entity that how managers should personally focus the employees so that the employees feel themselves as a part of business and work as hard as they can for the succession of the business. It all depends upon the managers because manager is someone who interact with employees and look after the jobs that employees do, if the manager is following a democratic leadership style and gave decision making rights to their employees then the employees will be automatically motivated.
Human Relations Management Theory
Human relation approach forced the importance of values, relationship and attitude of humans for the efficient and effective performance in organization. Elton Mayo wrote that in a modern way of working training is very important for humans to get use to the modern mechanical age. The human relation approach contributed an important awareness of the influence of humans at work in organization that manager should motive the employees and get the benefits of their improved productivity.
History of Habib Bank Limited
Habib Bank was established in 1947 in Pakistan and build its head office in Karachi. Their initial global local office was recognized in 1951 in Colombo Sri Lanka. They had over 41% of domestic market share and sustained to govern viable banking area with a key market share inner overseas remittance 55% and loan to small industry. They expand their operations to USA, Singapore, Oman, Belgium, Maldives and Netherlands.
By 29 December 2003 privatization commission of Pakistan announced that the government of Pakistan officially approved the Aga Khan Fund for Economic Development right to 51% of shareholding in HBL, by 26 February 2004 the management control handed to Agha Khan and the Board of Directors were reconstituted to have four Agha Khan Fund for Economic Development nominees, including the chairman, CEO and the three government nominees. (HBL, 2012)
Structure of Habib Bank Limited
Habib Bank Limited operates in 23 regions with 1423 branched in all over Pakistan. The head and management committee look behind the interaction of the bank. Each Head Quarter is headed by Chief Executive and assisted by General Manager. The Regional Head Quarter controls all the branches in that area.
HBL consists of more than 65 branched overseas. Head from Head Office at Karachi controls the offices of the bank with the help of senior management. Functional responsibilities of the bank are divided in seven groups known as;
International Operations group
Corporate Banking and Treasury Investment Group
Retail Banking and Operation Group
Finance Audit and Administration Group
Assets Remedial Management Group
Credit Policy Group
Corporate Bank, Financial Institution and project Finance Group
In addition to overall controlling, president manages the international operations group individually. At all the rank of provinces there are local head quarters controlled by Regional Chief Executive and each Regional Chief Executive is assisted by General Manager support service. Branches are also controlled by Regional Chief Executives. Offices of the earlier period have been closed to decrease supervisory layers which were operating under zonal offices and all this happened by the beginning of the new changes in the organizational structure.
Departments of HBL
There are few departments on which general or day to day banking of HBL composes.
There details are as under:
Inland Remittance Department
Foreign Exchange Department
Functions of Different Departments
The basic functions of different departments are as follows;
Its function is to receive money from people who want to deposit money with the bank as other banks do.HBL also tries to attract as much customers as they can to deposit their money. They offer different schemes to their customers which include the following;
Current Deposits: A type of bank account which is mostly used by businessman, the bank does not pay any interest to account holder and the account holder is allowed to withdraw their money at any time.
Saving Account: Saving accounts are those account in which a lower amount of interest is paid to account holder, it depends upon banks as well if the bank is Islamic then they do not pay any interest just the allow the account holder to withdraw a specific amount of money if needed.
Fixed Deposit: A type of account by which the bank pay a huge amount of interest but it depends upon account holder, the longer the deposit time is the more interest will be paid.
Making Loans and Advance
It is the most important function by HBL which makes loan to their potential customers and they charge a very high rate of interest. Sometime they charge different rates of interest as well which depends upon terms and conditions. Following type of loans and advances can be available for the customers;
Demand Finances: A type of finance which the customer can borrow for a specific time period and the customer is required to pay back without any notice. Transaction can be done once and rate of interest can also be charge.
Running Finance: HBL provides such finances against the securities of current assets like bonds, shares etc. The account is opened with the bank and the borrower is permitted to take out as much money as the borrower want from account within specified limit and a rate of interest is also charged.
Over Draft: This facility is mostly provided for the loyal customers and the customer is allowed to withdraw money more than they have in their account and the rate of interest is charged on only the amount of money the customer withdraw more than the available amount in their account.
Products Offered by HBL
Tele-printer Service: Introduced in 1952 which helps bank to improve its services.
Rupee Traveler's Cheques: Introduced in 1957 which facilitate customer in encashment of their traveler cheque at any division of the bank.
Scheme for small Factory Owners: Introduced in 1959 to give loans to small factory owners to boost the economy in Pakistan.
Foreign Tele Printer Service: Introduced in 1961, the idea behind such facility is to provide rapid Banking service to clients in overseas.
Gift Cheques Schemes: Introduced in 1962, HBL provides this scheme to their potential customers which could be use to send gifts to their customers.
School Banking: Introduced in 1962 to provide banking facility to children in a specific number of schools throughout the country.
Mobile Banking: Introduced in 1962 provided to their customer to get access to their account through their mobile phones as well.
Credit Card Scheme: Introduced in 1962 HBL provides such facility to their customers to enable them to get certain amount of money from specified branches of the bank. Some organizations also accept payment through valid credit cards as well.
Auto Cash Teller Machine: Introduced in 1988, a facility for the customers to enable them to withdraw money from their account through such machines at any time day and night.
Gold Card System: Introduced in 1991, HBL introduced such facility to their customer to enable them to get up to 10,000 rupees at a time.
Elements in the Structure of Habib Bank Limited
There are few elements found in the structure of Habib Bank Limited which are as follows;
Centralized Decision Making: The structure of HBL is critical where all the decisions are made by the higher management and the employees have to follow them. No one has the right to make any decision but just the management.
Downward Communication: Downward communication means a message passed from top level management to subordinates in downward direction. Manager communicates employees through speeches, leaflets, massages in company publications etc. The same policy is followed at HBL which create problem as massage from top to bottom cannot understood properly by the subordinates.
Chain Of Command: Chain of command at HBL is unbroken line of authority all the subordinates in an organization which shows who reports to whom. Each and every employee knows to whom an individual can report. The authorities are different for different levels of task.
Authority and Responsibility: Authority is the right to make decisions, make orders and allocate resources to achieve organizational goals. The pattern followed at the structure of organization is that everyone knows what is one's authority and responsibility.
Delegation: Delegation means the process to transfer authority and responsibility to the lower level. At HBL no such system prevails as manager try to keep as much right as they can, and if some right is passed it is sure that it will be distorted.
SWOT Analysis of Habib Bank Limited
SWOT stands for Strength, Weaknesses, Opportunity and Threats.
Officers of Habib Bank Limited are one the most professionals in the world
HBL has easy access to use an internal use of computer system. Information regarding the customers is computerized.
HBL has very good security system
HBL is the largest bank with more than 1439 branches
HBL is the experienced bank in Pakistan
24 hour access and easy payment product for high value transactions
Customer enjoys the service at the residential localities
Low job satisfaction
Poor ATM service
Highest number branches effecting the working environment in all the branches
Lack of professionalism in the branch employees mostly
Sense of uncertainty in the employees serving at low beneficial branches due to the downsizing branches.
Female feel uneasy in the working environment among male workers
Huge potential market for consumer banking
Opening of female banking sector which is a new idea
Government policies provided for HBL to take advantages to meet efficiently with the business to work out their problems with the immediate cash and financing services.
Opportunity to improve new technology
Habib Bank Limited provides opportunity to employ its skills and efficiencies in leasing business.
The environment that increases the difficulties the organization achieving high performance.
Shortage of Trained staff from lower level to upper level
Growing global technology advancement
Strict rules by the government
Competition by foreign banks
Increasing operation of foreign banks
Advance services by foreign bank to their customers
Implementation of Organizations Theory to Habib Bank Limited
Habib Bank Limited is one of the largest banks in Pakistan with an old and rich experience in banking system. It has more than 1439 branches in all over Pakistan and operates in overseas as well. The organizational structure is very critical and using centralized management style. The decision making rights are with only one person and the others are bound to follow.
The bank is using classical theory which is based on control on workers authority and responsibility that workers must be strictly controlled so that they do their job well and in a proper way, the authority must be passed from top to bottom and every employee must responsible for a specific task to fulfill. Fayol's administrative theory which is about to increase the productivity, also followed by the organization in such manners, few management principles are used by HBL as it has a centralized decision making system that only one person has the right to make decision and the subordinates have to obey them, there is a downward communication that a message is communicated from top to bottom, manager communicate with employees through speech, leaflets, etc but there is no room for employees to make decisions by their own which can cause de-motivation as well. There are different departments in organization and every department knows their responsibility and they know whom are they going to report, each department need to report to their manager and finally the managers report to the CEO of the organization.
Habib Bank Limited is the largest bank in Pakistan but still they have some problems with its management which they must come over it. Their problems are in certain areas and they must come over such problems in the following ways;
When they hire a new employee they must give a flexible job contracts to their employees because there is no job security for their employees due to which can get de-motivated and sometime they can be in fear of losing their jobs
When they recruit a new employee they must train their employee, they can give their employees any type of training On the Job Training or off the Job training. By giving a proper training their employees can get motivated and they may work harder to gain the organization goals.
Employees working in banking sector their working hours are not fixed mostly and they stay at banks till a very late time, there must be a transport facility for their employees to take them to their job and drop them back home when they get finished with their work.
If there is workload on employee HBL must hire more workers to decrease the workload on employees.
The management must maintain a rapid response to customer queries and must maintain a good relationship between their employees and their customers as customer satisfaction is very important not only for the HBL but for every organization.
The management must provide a proper customer handling training to their customers, they must have training workshops and coaching clinics etc which is very important for HBL to attract more customers as compare to other banks because every bank want to come up much better and flexible service to their employees and their customer.