Compensation.docx

“COMPENSATION & BENEFITS” FINAL REPORT

SUBMITTED TO: DR. TASNEEM SUBMITTED BY: ZEESHAN HAIDER SYEDA TOOBA SUMBUL HUSSAIN PROGRAM: BBA (HCM) BATCH-III COURSE: HUMAN RESOURCE MANAGEMENT INTITUTE: IOHBMSS DATED: 6th MARCH’2019

TABLE OF CONTENTS:

ACKNOWLEDGMENTS………………………………………………………………………… Pg. 2 SUMMARY……………………………………………………………………………………………. Pg. 2 INTRODUCTION…………………………………………………………………………………. Pg. 3 HISTORY……………………………………………………………………………………………… Pg. 4 HR PRACTICES……………………………………………………………………………………. Pg. 5 PREFACE……………………………………………………………………………………………… Pg. 6 VISION STATEMENT…………………………………………………………………………… Pg. 7 MISION STATEMENT……………………………………………………………………….…. Pg. 7 GOALS & OBJECTIVES………………………………………………………………………… Pg. 7 CORE VALUES………………………………………………………………………………..…... pg. 7 NBP VALUES……………………………………………………………………………………….. Pg. 7 COMPENSATION POLICY………………………………………………………………….. Pg. 8 COMPENSATION PRACTICES……………………………………………………………. Pg. 8 EMPLOYEES BENEFITS………………………………………………………………………. Pg. 9 RECOMMENDATIONS……………………………………………………………………….. Pg. 10

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ACKNOWLEDGEMENTS: Start with the name of ALLAH who is the most Beneficent and MERCIFUL. We will first of all thank ALLAH ALMIGHTY for giving us the courage and confidence to complete our project. Secondly, we would like to thank our teacher Mam Tasneem who had given us and opportunity to make this project that was based upon the pragmatic execution of HR compensation and benefits concept in real scenario.3rdly, we are also indebted to MR. KALEEMULLAH SHEIKH, who is Manager of employees benefits wing for his precious time and corporation; he gave us from his busy schedule.

SUMMARY: This report, as indicated by its title, covers the compensation practices of NATIONAL BANK OF PAKISTAN. The report gives the reader a profound discemment of the performance appraisal system of the company. It also describes the way in which goals are set and also how they are monitoring the tasks. The division of targets plus who is to report whom i.e. the span of control is also covered inside this document.

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INTRODUCTION: National Bank of Pakistan (NBP) is a major Pakistani commercial bank with headquarters in Karachi. Although state-owned, it operates as commercial bank, while still continuing to act as trustee of public funds and as the agent to the State Bank of Pakistan in places where SBP does not have a presence, as SBP is the major shareholder of NBP. The bank provides both commercial and public sector banking services. It is a lead player in the debt equity market, corporate investment banking, retail and consumer banking, agricultural financing, treasury services. As of March 2017 it has 1,450 branches across Pakistan with assets of approximately USD 17.2 billion. The Bank also operates a network of 21 international branches, 2 international Subsidiaries and 3 international Representative Offices. The Bank also has presence in the UK through United National Bank Ltd (UNBL), a banking institution incorporated in the UK.

The bank was founded in 1949 i.e. 70 years ago. According to 2017, its revenue increases ₨.85.32 billion (US$810 million), its Operating income increases ₨.36.79 billion (US$350 million), Net income increases ₨.23.03 billion (US$220 million) and Total assets of ₨. 2.37 trillion (US$22 billion). The Owner of the bank is the Government of Pakistan. The NBP's subsidiaries are Taurus Securities Ltd, NBP Exchange Company Ltd, NBP Leasing Ltd, NBP Modaraba Management Company Ltd, and CJSC Bank, Almaty, Kazakhstan. The Bank's joint venture is United National Bank (UK). National Bank of Pakistan branch in Washington, D.C.  INTERNATIONAL OFFICES: NBP also has branches /offices in the United States, UK, Canada, Germany, France, Bahrain, Egypt, Bangladesh, Hong Kong, Japan, South Korea, The People's Republic of China, Afghanistan, Turkmenistan, Kyrgyz Republic, Kazakhstan, Uzbekistan, Azerbaijan and Saudi Arabia.

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HISTORY: In 1949, National Bank of Pakistan (NBP) was established under the National Bank of Pakistan Ordinance of 1949 and was government-owned. NBP acted as an agent of the central bank wherever the State Bank did not have its own branch. It also undertook government treasury operations. Its first branches were in jute growing areas in East Pakistan. Offices in Karachi and Lahore followed. In 1950, NBP established a branch in Jeddah, Saudi Arabia, in 1955, NBP had branches in London and Calcutta, in 1957, NBP established a branch in Baghdad, Iraq. In 2003, NBP opened its branch in Kabul, and the first ATM in Afghanistan was installed there. In 2005, NBP closed its offshore branch in Cairo, in 2010, NBP opened its branch in Karaganda (Kazakhstan)and in 2011, NBP opened its representative office in Toronto (Canada). The Bank saw significant growth between 2000 and 2006. In 2016, total assets were estimated at PKR 1,799 billion, with total deposits being PKR 1,657 billion. Pre-tax profit rose to PKR 37.14 billion. Earnings per share have jumped to PKR 10.69. The increase in profit was achieved through strong growth in core banking income. Gross Interest income increased to PKR 114 billion through growth in the loan portfolio as well as increase in spreads. Gross Advances increased to PKR 781 billion. It ranges from providing credit to the unbanked market segment under NBP Karobar, to small and medium enterprises, to agricultural loans, to large corporate customers. It has taken various measures to facilitate overseas Pakistanis to send their remittances. In 2002 the Bank signed an agreement with Western Union for expanding the base for documented remittances.

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HR PRCTICES: NAME Mr. Faisal Ahmed Mr. Mahmood Akhter Nadeem Mr. S. Azher Hussain Mr. Asad Saleem

DESIGNATION Group Chief Divisional Head Divisional Head Divisional Head

Ms. Fozia Mumtaz Mr. M. Kashif Khan Mr. S. Imran Ghani Mr. Kaleemullah Sheikh Mr. A. Aziz Nadeem Mr. M. Khursheed Khan Ms. Shahla G. Hussain Mr. Mansoor Hussain Mr. Asim Nizam Siddiqui Ms. Rifat Sultana Mughal

Wing Head Wing Head Wing Head Wing Head Wing Head Wing Head Wing Head Wing Head Wing Head Wing Head

Ms. Shabana Shah Dr. Muhammad Asif Khan

Wing Head Wing Head

Dr. Muhammad Asif Khan Mr. Masood A. Khurshid Shamsi Mr. Mashood Shahid

Wing Head Wing Head

Coordinator

PLACE OF POSTING HR Management Group Personnel & Industrial Relations Division HR Development Division HR Services Division HR Overseas Wing Personnel Management Wing HR Information Systems Wing Employees Benefits Wing Institutional Discipline Wing Staff Loans & Welfare Wing Recruitment & Placement Wing Industrial Relations Wing Career Management Wing Legal Coordination & Grievances Wing HR Policies Wing HR Succession Planning Management Wing Outsourcing Wing Centralized Administration & Coordination Wing Centralized Administration & Coordination Wing

HRP is a process of analyzing organizations HR needs in the light of organization’s objectives, corporate and business level strategies. It includes developing plans, policies and system to satisfy HR needs. For NBP our dedicated staff is a key strength. NBP has been investing in developing this valuable HR department through need based training and career growth development. Our objective is to become an employer of choice and to maintain complete industrial harmony within the institution. Our new hiring of top class MBA’s as Management Trainee Officers (MTOs) and search for talent within the bank has helped in preparing second and

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third tier leadership lines which will shape our succession planning process and at the same time will ensure that with the passage of time our employee refinement and skill enrichment program continues. They also have started new ‘employee communication program’ and internal organizational magazine to improve the interaction of top and middle level management with the lower management. Female employees are being encouraged through female empowerment program under which they are given responsibility and challenging assignments. Currently over more than 60 females are employed as branch managers all over the country and some females hold senior management positions.

PREFACE: Compensation policy of any company is very confidential no one easily tell anyone about their pay plans and their performance measures and strategies regarding compensation policy. We try our best to talk with employees as we met their HR manager and try to find aspects regarding compensation like their base salary plan, their bonuses plan, allowances and incentives stock options or benefits after or during the job or what type of pension plans they provide to their employees. This report contains a brief story about compensation plan of NBP how they reward their employees and retain them. STRENGTHS:    

Oldest institution More deposits than other banks Employee benefits Board network

WEAKNESSES:     

Lack of modern equipment Lack of computerized system Corruption Uneven work distribution Favoritism

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VISION STATEMENT: To be recognized as a leader and a brand synonymous with trust highest standards of service quality, international best practices and social responsibility.

MISSION STATEMENT: “To make the bank complete and competitive with all international standards in performing, quality of, operations, staff, financial strengths and products and services to develop a culture of excellence in every spare of activity of the bank.”

GOALS AND OBJECTIVES: To enhance profitability and maximizing the share of NBP through giving the leverage of existing customers and diversified range of products. “An organizational objective is the intended goal that prescribes definite scope and suggests direction to the planning efforts of an organization.”

CORE VALUES:      

Highest standards of integrity Industrializing teamwork and performance culture Excellence in service Advancement of skills for tomorrows challenge Awareness of social and community responsibility Value creation for all stake holders

NBP VALUES:    

People make the organization People collectively yield results People have ambitions and aspirations to be distinguished and rewarded People form the human capital to be developed and invested in

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COMPENSATION POLICY: While interviewing the manager we find they are using the compensation policy and have different rewards for their employee’s different type of incentives and benefits they give to employees. While there is not any precise performance measure through which they measure the performance of employees they are using traditional pay system which based on seniority as employee’s length of service in performing their jobs increases pay of employees gradually increases with that. On the other hand, there is no proper check and balance on employees because of weak HR system of NBP. In NBP pay increases on the basis of seniority and often on the basis of merit.

PAY FOR PERFORMANCE: Pay for performance is rarely use in the NBP there are not proper HR system and have no proper performance measure. As it is government bank, employees not get easily promotions and mostly promotions based on intercession. While they are using merit ratings but person focused pay system is not used in NBP.

GOVERNMENT ROLE: As NBP is a government owned bank therefore mostly changes in NBP are done by the

government. Employee compensation and benefits rules are decided by government along with market mechanism conversely, good employment benefits in NBP ensure minimum turnover rate.

COMPENSATION PRACTICES: At present, salary structure of NBP employees is much better than its competitors. Besides basic pay, following allowances are also paid to employees irrespective of their grade or scale, House rent allowance 50% of basic pay, conveyance allowance 90 liters of petrol to clerical staff, utility bill allowances, education allowances, medical allowances(medicines), maternity allowances, etc.

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CASH AWARDS: Every year, best performers are awarded with cash awards ranging from Rs. 100,000\- to Rs. 500,000\- depending on the grade of the employee. Mostly managers are benefited from this award to motivate them for procuring more business. Employees are rewarded for extraordinary counter service or adopting precautionary measures to prevent frauds. BENEFITS AND BONUSES: NBP provides their employees several types of monetary or non-monetary benefits and other allowances and bonuses, like they provide different types of leaves and accommodations.

PAY INCREASE: Employees get annual increase in their basic pays depending on their performance, cost of living with increase rate varying from 4% to 17%. All employees get their annual increase as per announced rate by the Head Office irrespective of their performance but is mostly biased and suggested. However, from the year 2009, concept of “Pay for Performance” is introduced in NBP for all the officers and executives but it is not fully implemented. There are loan facilities, motor cars for branch managers and promotions.

EMPLOYEE BENEFITS: The benefits of the NBP high profits are instead renjoyed by shareholders with their fabulous 125% return on shares, as well as by staff executives and BODs in the form of accelerated promotions and liberally allowed perks, allowances, facilities, fees, salaries, cash rewards and incentives. It is painful to know that poor pensioners, their widowers and children are not provided any relief from the bank’s high earnings, though they are badly affected by inflation; despite the fact that the federal government and its other subsidiaries have been provided relief to the retired employees yearly. In the light of the above, it is expected that the NBP and their BODs should now follow prudent, fair and objective policies to promote judicious

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and equitable distribution of profits amongst to all stakeholders, including retired employees, without any discrimination. GRIEVANCE PROCEDURE: In NBP there is a concept of grievance procedure, employees can concern to upper level management if there is nothing appropriate happened with them. LEAD OR LAG: NBP uses Lead strategy to get better employees and want to retain them. On the other hand, employees get extra benefits, incentives and allowances rather than other banks.

RECOMMENDATIONS: Staff strength should be enhanced and only professionals and qualified persons should be recruited. Organizations must do something to reduce biasness which is mostly used in promotions. They should make proper measures and eliminate favoritism. Organization need to strengthen the HR department.

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