Planning: Mission and vision of HBL totally reflect that it exist only to achieve profits . It creates a negative image in the society. The mission of hbl totally ignores the concept of corporate social responsibility. HBL have abundant resources (Largest HR , effective and vast information technology system and abundant capital ) but not yet at the position according to its resources. The reason of such lagging performance is due to non commitment of employees to HBL.
In the city of Gujranwala for example, you will find no place to obtain cash from credit cards or traveler’s checks, though this city is the fifth largest city in Pakistan. HBL now a days is diversifying its business in international market and opening its branches into new countries which is creating loss to HBL showing weak planning. PLANNING TOOLS USED BY HBL “Planning tools are techniques mangers can use to help develop plans” HBL is using a FORECASTING, TIME SERIES ANALYSIS METHOD tools when develop plans
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FORECASTING is a planning tool used to predict future environment happenings that will influence the operation of the organization. It includes political economical condition, consumer income forecasts than we plan. TIME SERIES ANALYSIS METHOD is to predict future sales levels by analyzing the historical relationship in an organization between sales and time. Critics on Objectives: Objectives are basically branches of mission statement. As they flow from the purpose or mission of the bank. They are developed after analyzing environmental trends.
In setting an objectives mainly small branches are ignored and most of the consideration is done to the large branches with full fledged facilities. For example in a small branch where online facility , ATM and sufficient financing facility is not present can not perform well but the objectives and targets assigned to them is extensive to their resources. Omnipotent view of management conflicts with Open system: In HBL there is an open management system “An open management system is one that is influenced by and is continually interacting with its environment. EXTERNAL FACTORS include political, social, demographic, consumer, economic, state bank policies and rules effect the bank. The threat of inconsistency and government policy regarding to business and economics sectors, specially political and regional situation which makes the environment uncertain. The Hbl believe on omnipotent view of management that managers are directly responsible for the success and failure of the organization. As HBl is an open system so many external factors that are beyond the control the managers are held responsible for that factors also they must believe on symbolic view of management.
Managers are neither helpless nor all powerful. Internal and external constraints resist to the managers performance so HBL should encourage their managers so and facilitate them to cope or minimize such external factors. Centralized Decision Making By looking at the organizational structure of HBL would be found that the structure at HBL is a critical one. All the decisions are made at the top management level and the subordinates have to obey these decisions. This trend in the decision making shows a pattern of rigidity in structure of HBL.
The HBL mangers focuses on intuitive decision making. At branch level the managers usually takes programmed decisions that are routine and repetitive. The managers at different branches lack the skills to deal with non routinized and uncertain situations. Partial applicability of MBO: A fake MBO system exist in HBL. The targets are not mutually set, the RC’s fosters their decisions and assign targets to different branch level managers and while evaluating targets usually lose talk is practiced.
Actually the HBL still implement the traditional goal setting management where objectives are set at top level and then communicated to the regional level to different RC’s (regional Chiefs) which then communicate it to different Managers of the branches. So overemphasis on accomplishing on their goals with regard to other branches can be counter productive. Now a days manger mainly focuses on their targets ang also having competition with the other branches of HBL steals one another customers. Organizing:
Organizing is a process of establishing orderly uses for all the organization resources. ANALYSIS OF ORGANIZATIONAL STRUCTURE The purpose of an organizational structure is to help in creating an environment for human performance. It is then, a management tool and not an end in its own. Although the structure must define the task to be done, the rules so established must also be designed in the light of abilities and motivation of the human recourse available. By analyzing the organizational structure of HBL presence of the following elements can be found in its structure
Downward Communication No doubt it’s a very traditional approach but it can create problems because it ignores the receiver of the communication because the issuer of policies and procedures does not ensure communication. In reality may the messages communicated downward are not understood perfectly. PROBLEMS RELATED TO RESPONSIBILITY: * Overlapping Responsibility or Over Responsibility: This refers to the situation in which more than one individual is responsible for the same activity. At HBL the manger is held responsible for all the employees working under him.
If a fraud or a material error is done by an officer the manager is liable for such act so creating a stress for mangers at all time. Authority is the right to perform or command Those positioned toward the top of the chart possess more authority than those positioned toward the bottom. Authority is the character of communication by which an order is accepted by an individual as governing the actions that individual takes within the system. The order must be understandable, consistent with the purpose of the organization and compatible with individual personal interests.
The upper management has the line authority. Whereas staff goes to the middle and lower level management. The individual who is having line authority at one time may have staff authority at the other time. Functional authority generally assigned to individuals to complement the line or staff authority they already posses. It generally covers only specific task areas and is operational only for designated amount of time. ACCOUNTABILITY: The concept of accountability implies that if an individual does not perform predetermined activities, some type of penalty, or punishment, is justifiable.
The concept of accountability also implies that if an individual perform predetermined activities very well some type of reward is given. At HBL if a person is vested authority he will also be accountable for his/her job to the senior management. He may be issue charge sheet or inquiry committee may call him/her and may be awarded punishment accordingly. DELEGATION: Delegation is the process of assigning job activities and related authority to specific individuals in the organization. Delegation is the process, which managers use to transfer the authority and esponsibility to position below in the hierarchy. Most organizations today encourage managers to delegate authority to the lowest possible level to provide maximum flexibility to meet customer needs and adapts to the environment. But at HBL no such system prevails the managers try to keep as much of the authority as they can and if some authority is delegated it is sure that it will be misused Inappropriate Human Resources Refers to organization members who do not make a valuable contribution to the attainment of management system objectives.
It means that the individual are ineffective in their jobs. Productivity in all organizations is determined by how human resources interact and combine to use all other management system resources. Lack of Human Resource Inventory System Human resource inventory is an accumulation of information about the characteristics of organization members; this information focuses on members’ past performance as well as on how they might be trained and best used in the future. There is no such system at HBL Acquiring Human Resource: 1) Recruitment: Usually Recruitment at HBL is somewhat reference based.
The HBL while recruiting give advertisement at their site as well as at SBP site. However the HBL should focus and implement the concept of campus hiring through which HBL can easily recruit newly fresh energetic graduates . On campus hiring leads to minimum cost of recruitment to HBL. Employee referrals and recommendations: Most of the jobs are usually given on reference based so it limits the chance of recruiting the desired professional for the job. Outsourcing: HBL does not take the facilities of executive search firms to hire experienced top and middle level professionals as Bank al Habib does. Mostly recruit experienced professionals at top and middle level enable him to become stable in the market) The HBL also recruit temporary employees at lower level through outsourcing . Professional People employment(PPL) facilitate HBl by providing young temporary employees to whom no fixed salary is paid and commission is given on their respective sales which creates de motivation in temporary hired employees . Their does not exist any agreement b/w HBL and the employee and at any time HBL can fire and terminate those temporary employees. 2) Selection: HBL only use testing for selection.
Written test is taken from those candidates who don’t have any job experience. Sample paper is also provided to them for their preparation. Then three interviews are taken from those who passed the written test. After clearing interview a medical test is taken. If they are selected then an appointment letter is given to them. The candidates who have work experience in any bank are required to give three to five interviews and a medical test. Their Testing system for selection of employees in not transparent means that they do not disclose the performance results of the applicants which is unfair to those who deserve that particular position. ) Training: Training is the process of developing qualities in human resources that will enable them to be more productive. After selection three months training is required at Management and Development Institute only at Karachi, Lahore and Islamabad for those who don’t have any work experience in banking sector. Also HBL train its employees by organizing seminars especially when they are launching any new product. Where lectures are given. After training they are tested and then certificate is given to them. It is a continuing activity at HBL. HBL does not apply the concept of JOB ROTATION.
HBL focuses on the specialization concept which is very traditional and in case of any contingency it will cause wastage of time and reduce performance and also limit individual’s exposure to company operations and for turning a specialist into generalist. CONTROL Control may be defined as making something happen the way it was planned happen HBL had Internal Control Department (Now Compliance Group) which ensured proper controls in the organization. All the instructional and informational circulars are issued by consulting them. Concurrent Control In HBL, concurrent controls exist while performing the job manually or through system.
If the job is being performed through system i. e. MISYS (software for performance of daily banking transactions installed at head office and line with branches), the well defined security controls are in place. Hence every transaction whether it is performed manually or through system, the well defined procedure is in place for observance of the employees while completing the work. 3. Feedback Control It is the control that takes place after the work has been completed. Control that concentrates on past performance of the organization called as Feedback control.
With the help of this control corrective actions/measures are taken looking into past history of the organization over a specified time period. In HBL, on introduction of any new product whether it is consumer or commercial, the feedback is taken and corrective actions are taken to correct the situation where numbers of customer complaints are being received or the product has some built in problem and not based on customers’ satisfaction. In the present environment, it has been vital for the banks or any other industry to have proper feedback of the transactions to take remedial measures. Internal & External Audits (concept of financial discipline, accountability, good corporate governance, professionalism and impartiality) Performance Appraisal at HBL: The appraisal process begins with the establishment of performance in accordance with the organization’s strategic goals. Performance is measured against absolute standards. 360 degree appraisal The HBL should use 360 degree evaluation in which feedback is taken from supervisors, peers, employees and customers is taken I order to evaluate and appraise the employees. Earlier promotion was after 4 years
Its importance at HBL is as follows: * It provides systematic judgments to support salary increases, promotions, transfers, and also demotion and termination. * It is a mean of telling subordinates how they are doing their job. * It furnishes a useful basis for the coaching and counseling of individuals by superiors. It is done once in a year. Supervisor of the employee appraises him. A supervisor appraises him in grades i. e. , A, B, C and D. It direct affects salary and promotion. After three years individual is eligible for promotion.
If an employee has a “C” he/she is not applicable for promotion’s interview. There are not any fixed rates for salary increment. New rates are announced every year. GRADE REMARKS A Excellent B V. good C Good D Unsatisfactory Leniency error:
In HBL middle managers give favoritism to some employees while appraising their performance causing Leniency error in appraising process. Window Dressing: In this competitive environment many banks UBL,MCB,ABL including HBL are involved in the malpractice of Window Dressing. It is a very serious crime through which bank deceive their stakeholders by showing false record( At closing, deposits figure is increased falsely for just two days) in order to show high credit ratings AAA+ or AA+ however their actual position reflect some thing else. Recommendations and Conclusion 1.
HBL is the first Pakistani Bank, which after creation of the country looked after the financial needs of the then Government. It provided support to economic, industrial financial and banking sectors of the country resulting in establishment of industry in the country. HBL should help grow the industrial activities by financing industrial sector. It will help to create more jobs. 2. Before privatization, HBL was conservative approach. It is now an aggressive and progressive bank of the country as evident by its products i. e. Auto /Personal /Mortgage Loans. It is a market player.
HBL should target the middle class to enhance its market share. 3. HBL being a local bank has also existence in 24 countries of the world. It has started to relocate its position in international market. It sold its Fiji and Australian Operations and opened its rep. office in China and two more Branches in Bangladesh and one more in Afghanistan. In future, it has planned to start its Operations in South Africa and Central Asian States. HBL should relocate its operations as soon as possible and should sell its operations running into loss to utilize the resources for better location. 4.
HBL has upgraded its system by installing “MISYS” to ensure real time banking at its about 300 local and overseas locations. It should put its remaining branches on the new system as early as possible. 5. HBL has vast network and no other bank will be able to compete it and its market share may enhance. Bank should effectively utilize its vast network to capture market share. 6. It has reduced its staff strength resulting in reduction its administrative cost. The resources should be directed for upgrading branches. 7. It is hiring/recruiting professionals in middle and lower management to achieve organizational goal.
Fresh graduates from the universities preferably IBA /LUMS are being offered jobs. It is providing job opportunities at different levels. On job training and job rotation for the employees is ensured. HBL should recruit from all the universities. Written test should be compulsory for all the fresh graduates. 8. HBL is observing Anti Money laundering(AML) directives of the SBP and has strengthened its controls not to allow its channels for bad money. On detection of a suspicious transaction, the same is reported to its Head Office and SBP. HBL should send all the staff on AML Training Program. . HBL is also discharging its social corporate responsibilities. It has given jobs to the players to help the support activities in the country. HBL should offer more jobs to the players. 10. HBL should use Human Resource Inventory System. 11. Assessment centre program should introduce in selection process. Knowledge of Risk Management is Missing The main purpose of financial and banking organization is to create valuable system by interacting with its environment, customers, constituents, suppliers, technology, competition, economy, government, etc.
A valuable system is created by the conversion of available resources i. e. human, financial, physical, and intangible assets into goods and services that fulfill the needs of the customers and save the best interests of the banking and financial organization. Risk management performs all these diversified but integrated work to achieve maximum out-put. Managing risk is actually managing the organization: planning, organizing, directing, and controlling organization systems and resources to achieve objectives.
Managing risk must come from within and act to change the organization and its response to changes in the environment. Now many domestic banks are hiring experts of risk management to secure their precious assets. HBL has also created risk management group at head office and as well as regional level to save the best interests of the bank and enhance the chances of investments. b) Total Quality Management: Paradigm Shift Ours is the age of cutthroat competition, scarcity of resources, technological advancement, integration of financial services, expansion of economic markets and cultural diversity.
In these complicated and conflicting financial and economic scenarios the need of TQM in the ranks of domestic banking industry is indispensable. The middle management should need to have basic understandings about complicated management processes, crisis management tools, marketing/product strategies, financial and treasury management techniques, financial discipline, soundness and transparency of banking system, human resource administration and above all genuine leadership qualities to adequately operate within a highly sensitive and complicated industry. The banking industry should determine where mprovement is needed, how service can be improved and where operating system breakdowns occur, why they occur and how they can be avoided. Areas Where Improvements is to be needed * ? ? Communications Skills. No ambiguity should be left. Clear and comprehensive instructions * ? Transparency in all matters especially in financing * ? Aggressive marketing strategies in retail and commercial banking * ? Institutionalization of Human Resource Management (best man should be posted to best assignment, refreshing courses, seminar on emerging banking and financial problems etc. tc. ). * ? Humanistic administration, because human is supreme than any entity. (promotion policies, award & reward) etc. etc. * ? Research and Development facilities (Domestic market research, economic analysis, strategic insight of major economic and financial accords, international markets knowledge, rigorous planning and development, loss & prevention mechanism) * ? There should be central compliant cell in every bank in the country in order to reduce people’s complaints and foster the ratios of productivity. * ?
Commonness of E-commerce and Internet bank should allow flourishing in the domestic banking industry of the country. * ? Scope of Investment Banking is very much there and bright as said by finance minister of the country. Concrete efforts should be made to initiate investment-banking operations in the region. * ? Money laundering and white-collar crimes are on the rampant. Aggressive and comprehensive mechanism should be set-up to save the domestic banking industry of the country. * ? General working conditions ought to be improved