Section Ii

CHAPTER 6: CRITICAL ANALYSIS 6.1. INTERPERSONAL RELATIONSHIPS The nature of interpersonal relationships is very much varied. At one extreme they may be positive and constructive or else employees may dislike each other and don’t have mutual respect for each other. Conflict can be good for a group if it is managed appropriately. Conflict is the disagreement between two or more individual, groups or organizations.1 By airing differences, group members can produce quality decisions and satisfying interpersonal relationships Interpersonal relationships in the branch operations can be discussed in two different aspects. Firstly, the relationship of employees within the department. Secondly, the relationship of Branch Operations with other departments. The Human Resource Department should keep an eye on the interpersonal relationships of the employees in the bank as it can harm the functioning of the banks and can impart a very negative impression on other employees and the internees. 6.1.1. Interpersonal Relationships in Branch Operations Competition inside the department with other employees can encourage employees to work more but if viewed unconstructively, many problems can arise due to this reason. Interpersonal relationships are usually affected when the employees are in the quest of competing each other. This approach no doubt is positive but at the very same time it may result into antagonistic behaviors. Employees who lead in the competition and who are able to create a good impression on the upper management often find difficulty in adjusting with their colleagues. Similar situation exists in the Branch Operations. It has five desks that deal in all the major important processing of the bank. The employee’s work differs but

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requires coordination for the efficient working of the department. Lack of coordination may prove to be disastrous. Employees in the department at times even pass comments on each other. No doubt such incidences are very rare but are very shocking for the interns and leave a very bad impression. Inspite of these practices being uncommon but may get tense at times leave a very negative impression. 6.1.2. Interdepartmental Relationships Sense of competition as discussed above can no doubt be a motivating factor for the employees but it entirely depends on the context in which it is perceived and practiced. The haste for taking a lead often results in lack of cooperation and a rude behavior with the employees of other departments. Gradually this type of behavior develops negative attitudes among the employees and often creates tension and anxiety. The work environment gets disturbed and employees often get frustrated. Also, employees waste their time in backbiting and gossips that only create bad feelings for each other. In case of minor mistakes by the employees of the rival department, it is often made an issue and the qualification, devotion and concentration to the work is challenged. Furthermore, mistakes are often not accepted and others are held responsible for it to avoid any trouble from the upper management. In this struggle other employees who are never involved in such activities also have to face trouble. Such problem arises almost daily as departments are interlinked and dependent on each other for their processing. The employees, no doubt do not let the customers to suffer but extreme behaviors may not prove beneficial for the employees and ultimately for the customers. 6.1.3. CAUSES 

Differences in the Backgrounds

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Interpersonal relationships of the employees in Branch Operations are apparently constructive. But in fact, the employees have personal conflicts, prejudices and jealousies for each other. There are many reasons for such behaviors. The first and foremost is the differences of the employees due to different backgrounds. Their educational qualification and experiences differ. This nonuniformity has basically generated conflicts. Also, Personality clashes has resulted into conflicts Consideration and solution is required by the manager for this problem as it can prove to be highly unproductive. The manager should try to make them work as a team. In addition to this, training programs can be arranged for those who fall behind in education from the other employees of the department to enforce uniformity in the department. 

Politics in the Bank

Political behavior describes the activities carried out for the specific purpose of acquiring, developing and using power and other resource to obtain one’s preferred outcomes.2 Favoritism and politics in promotions, rewards, etc., are also the main factors that added to the negative interpersonal relationships. Also, excessive competitiveness among the employees has created political attitudes and behaviors in an effort to gain advantage over another. Politics and favoritism observed during hiring, promotions, training, rewards, etc., is a major issue in almost all the organizations. It is also the main cause of job dissatisfaction, low morale, low productivity, etc. similar problems exist in Citibank as well which has created further problems. Politics has been observed due to personal prejudices hindering the work and future prospects of the other employee. This is in fact one of the major causes of anxiety and tension among the employees. In other departments, this problem has even forced employees to leave their jobs.

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6.2. OVERBURDEN EMPLOYEES As far as the working of the bank is concerned, Branch Operations is perhaps the most imperative department of the bank. Its importance can be judged by its responsibilities and duties that it performs. This is the place for actual transaction and it deals with all the paper work. Furthermore, other departments of the bank heavily rely on the processing of branch operations making it the busiest department of the bank. Also, employees have to be very careful in their work as a minor mistake in any transaction from their pert can lead to disaster. The dependence of other departments and the pressure that it has to bear makes it’s employees overburden generating the need for more staff. The employees are always found very busy in their job. They even try to utilize their lunch break to finish their work in time. Although the bank timings are from 9:00 to 5:00 but the employees are often found working till late at night. Often the expense table is found to be very much overburdened at the end of the month. It has to compile and prepare summary reports of the various expenses occurred in the entire month. The over timework can also be perceived as a dedication and commitment on part of the employees. But at the very same time, the fact that it proves the workload and the work pressure cannot be denied. This usually creates a negative stress on the employees and can affect their efficiency and effectiveness. Thus, the department needs more staff to reduce the burden of the employees and to enhance the quality of the work. This will help the employees to work more effectively decreasing the chances of mistakes that can ruin their career. The Human Resource Department should consider this problem and should take concrete steps to solve it.

6.3. PHYSICAL ENVIRONMENT OF THE WORK PLACE Physical environment has a direct impact on the quality of work. Employees working in a secure and a better physical environment are able to concentrate

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more in their work. Organizations have to provide such an environment to their employees where they can fully give attention to their work. In addition to this, employees and customers judge the organization by its outlook and other aspects of physical environment. An organization equipped with the latest technologies that ensure security and provides a soothing environment to its employees can best extract the work from them. It also makes them feel that they are being given importance and consideration by the bank hat further enhances their commitment and dedication to their work. Citibank provides a healthier working environment considering every aspect for improvement. Organizations should not expect much from their employees if they provide poor working conditions to them as it distracts their attention from their work. Utilizing the latest technologies branch operations apart from being centrally air conditioned with the rest of the branch is fully equipped with comfortable furniture and computers for carrying out the routine work. The department is arranged in such a way that a single glimpse gives an idea of a professional environment. 6.3.1. Disturbance: Hindrance in Efficiency Inspite of providing a good physical environment one factor is missing. Being the busiest department of the bank it requires a work environment that enables them to pay complete attention towards their work. The physical setup in the department leaves little privacy for the employees. The department is in fact very small and looks very jam-packed. The desks are placed very near to each other and look crowded with the cupboards. A normal conversation can easily disturb the other employee creating obstruction in his/her work. This factor affects their concentration thereby affecting the quality of their work. Considering the importance of this department and its functioning efforts should be done to reduce this problem.

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Usually, the department gets overcrowded after the lunch break. This is due to the fact that the employees of other departments gather here for the completion of their processing or if there is any error in some transaction. Moreover, the department was crowded with interns that added to their disturbance.

6.4. LACK OF WAITING AREA Lack of waiting area brings forward another major flaw of Citibank that can challenge its professionalism. It looks very awkward that a multinational bank offering a wide variety of products and services and successfully competing in the market lacks a place where customers or other guests wanting to meet the employees doesn’t have a place to sit and wait for them. Moreover, the situation becomes worse when the guests have to stand outside the department until the guard informs and takes permission from the respective employee. After the permission has been granted they have to sit in the office where privacy lacks putting them in a state of discomfort. The visitors also feel hesitant while talking to or discussing their problems with the employees. This creates a poor impression of the bank. No doubt, the department is restricted for the customers but vendors and the service providers to the bank may require meeting with the processors. From the employee’s point of view, they are in a similar state as to that of the customers. This creates an uneasy atmosphere in the department discomforting both the sides. Moreover, customers also fear lack of confidentiality further adding to their uneasiness. Customers who are impressed by the architecture of the bank, lack of a sitting place is a sheer disappointment for them. The building no doubt is very impressing but it has a few discrepancies. Such important imperfections needs immediate solutions. In the present day, where customers needs and comfort has gained tremendous importance and where only those organizations survive and prosper that think and act on behalf of customers, are ranked poorly in the opposite case. Physical

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structure and working environment creates the image of the organization. If the very first impression is poor, customers expect less of them. Since the bank gives the customers the top most priority, steps should be taken to make them more comfortable on all the levels

6.5. EXPERIENCE AND SKILLS: A CRITERIA FOR HIRING Every organization, which is dedicated in competing in the market, has a welldefined recruitment policy. Every such decision depends entirely on the skills, education, experience and other such factors required for a specific occupation. Recruiting is the process of finding and attracting capable candidates for employment3 The Human Resource Departments has to analyze and identify all the requirements of the job and then accordingly hire individuals. Also, every organization uses established methods of inviting candidates for the hiring process. The bank due to it’s good image leave little constraints for the bank and attracts a large pool of candidates benefiting the bank to select the most talented and suitable person for the job. In Branch Operations, vacancies rarely arise as normally other employees are either rotated or are promoted to these positions. In the case of this specific department, practical know-how along with education in the relevant field is significant. While hiring employees for branch operations specifically, the bank doesn’t consider the working experience of the candidate in the relevant field. Employees are usually young and have just ended with their studies. Work experience also reduces the cost of on-job-training of the employees. Practical knowledge already gained in the relevant field would decrease the waistage of time and effort of the trainer and the cost of the bank. At the very same time, another drawback arises in the recruitment process of Citibank if experience is made criterion for hiring. It would discourage fresh graduates having fresh minds and who are ambitious, highly motivated and who want to prove themselves. But considering branch operations particularly,

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candidates already trained will be beneficial from the bank’s point of view as the working of this department is almost similar to any other bank.

6.6. COMMUNICATION AMONG EMPLOYEES Communication is the process of transmitting information from one person to another.4 In these days of Multinational cultures, where organizations extend their boundaries throughout the planet and where Corporates’ rule the world, effective and fast communication has become essential for the survival of the organizations. Effective communication is the process of sending a message in such a way that the message received is as close in meaning as possible to the message intended.5 Organizations cannot afford to compromise on the development of communication medias and channels. The greater the organization has the adaptability of new technology, greater is the likelihood that the organization will have less discrepancies in its functioning. While discussing Citibank and specifically Branch Operations, any flaw in the communication system will directly influence the functioning of the bank and in extreme cases may result in the financial losses of the bank thereby affecting its credibility. To prevent any possible error in this system, the bank apart from emphasizing the verbal communication through face-to-face meetings and telephonic conversation also fully utilizes the electronic medias especially the use of e-mails via Internet reducing cost and time. 6.6.1. Verbal Communication Verbal communication is face-to-face conversation, group discussions, telephone calls and other circumstances in which the spoken word is used to transmit meaning.6 The bank emphasizes on effective communication program at all levels in the organization. Managers are responsible to ensure that employees are informed of business objectives, policies and performance so as to generate better understanding. Employees have an equal responsibility to feedback information, ideas and suggestions to management. For better communication managers should

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convey the message properly and the receiver should receive properly. Communication within the Branch Operations is sometimes affected due to disturbances and the inability of the manager to convey it properly. Accent and pronunciations often create problems for the receiver. Furthermore, meetings are rarely arranged in this department. Meetings are important for keeping the employees informed about progress and new plans of the organization. Inside the branch, telephones are widely used for communication with other employees. 6.6.2. Nonverbal Communication All the Citibank branches are linked together through a computer network. Communication with the employees of other branches is often nonverbal and is done through e-mails in case if it requires no urgency other wise telephones are used for verbal communication. Communication brings forward another problem that is observed in almost every organization of the world. These are the grapevines, gossips and different barriers in the communication system. Grapevine is an informal communication network among people in an organization.7 In verbal communication monitoring is difficult while nonverbal communication can be monitored easily. Citibank N.A, therefore routinely monitors the messages of the employees. They even reserves the right to retrieve the contents of the messages for the purpose of monitoring if the use of the e-mail system is legitimate, to find messages lost due to computer failure, to assist in the investigation of wrongful acts or to comply with any legal obligation. To further prevent any misuse of the e-mail an employee will be accountable for all activities created under his/her password. According to Citibank N.A, Pakistan’s standard employment policies unauthorized use of a password is treated as a gross misconduct. Therefore computer passwords and e-mail passwords should never be shared with other employees in any case.

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Due to the strict policy of the bank so far no such incidences have been found. This factor provides additional security to the employees of the bank where work force diversity exists.

6.7. NEWSLETTER REQUIRED The newsletter is designed to provide sound internal communication to employees regarding important information they need to know, activities happening in the organization and any thing else of interest.8 The basic aim behind these programs is to make the employees aware of what is happening around them to vent frustrations maintaining and enhancing their commitment and loyalty towards the organization. Newsletters are also the part of communication programs in any organization. This missing factor points out another shortcoming in Citibank. An organization’s newsletter is a means of providing information for employees in a specific recurring periodical. Employees often get frustrated when the organization doesn’t take them into confidence and share the current happenings or incidences in the organization. Things get even worse when rumors spread in the organization. A typical newsletter gives all type of information related to the particular organization including any success, losses incurred, threats faced by the competitors, stories about employees receiving awards on some extra ordinary performances, etc. newsletters are the best way to communicate detailed and technical information. Branch operations can make best use of it by knowing the growth rate of the bank, expenses incurred, increase or decrease in the number of customers, change in the policies of the bank etc. the bank can utilize the newsletter for taking suggestions of the employees and to take them into confidence if any change in the organization is introduced or if the bank is passing through a decline stage, etc. this will prevent the spread of rumors that only increase frustration. Contrary to this greater loyalty on the part of the employees can be expected.

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6.8. DEFICIENCY OF LOWER STAFF 6.8.1. Responsibilities of Lower Staff in Branch Operations The importance of lower staff in any organization can never be overlooked. They fully participate in the functioning of every organization. The lower staff in Branch Operations are as much as part of the bank as any other employee or a manager. Their code of conduct, dress code and duties assigned and their efficiency completely explains their role and importance in the operational activities of the bank. The lower staff in the bank has to perform various duties, namely, receiving, sending and replying important faxes, attending and taking messages on the telephone in the absence of the employees, carrying out the paper work, ordering for food and tea and many more. Branch Operations heavily rely on its lower staff for its processing as it highly correlates with other departments of the bank. Any irresponsibility shown by the lower staff can result in misplacement and loss of the necessary documents. They have to be very careful in filing the papers, stamping the cheques and in bringing and taking the papers to other departments. 6.8.2. Need of More Staff If the work performed by the lower staff and their number in the department is compared it becomes quite obvious that they are overburdened. The fact can never be denied as Branch Operations has only a single lower staff member to carry out the above mentioned activities. A single person is often found in a state of confusion as to decide which work is more important and should be finished first. He has to receive and send faxes and to report it to the concerned employee, photocopying the papers and documents asked by the employees, take signature cards of the customers for microfilming and bring them back, etc. Every day he has to finish all the hectic and tiresome

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work including taking papers from one department to the other. This can affect his willingness to work attentively and with full concentration. It seems very unprofessional and unkind attitude on part of the bank towards the lower staff. Considering the demand of work in this crucial department and the fact that other departments depend on this core department for their functions and processing, the bank should hire more staff. 6.8.3. Low Salary Packages Inspite of being over worked, the lower staff is not paid accordingly. They have to work even when the employees leave the bank revealing that their work exceeds their work time. Maximum salary paid to the lower staff never exceeds Rs.5000 and ranges from Rs.4000 to 5000. Their salary package shows that the bank is not very fare with it’s lower staff. Their work requires diverse job demands and need consideration of the bank on their pay packages. Moreover, their employment is on contract basis rather than permanent basis. Their contracts are renewed yearly, upon which they are given minimum increments towards their salary. The minimum wage and a small increase in the pay demotivates them to work. The bank should review the pay packages of the lower staff, as their importance cannot be undermined.

6.9. EMPLOYEES TRAINING PROGRAM Employee training is important as it leaves little chances of job ambiguity. Employees training can be discussed from two aspects. Firstly, new employees hired are trained initially and then training programs are designed for the employees’ already working in the bank. The training programs are offered to the managers and the employees depending upon its requirement and their positions in the bank the ultimate purpose of which is to maximize organizational productivity.

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Training programs are important as it polish the skills and abilities of the employees. It also reduces the boredom of employees who get tired of doing a routine tiresome work. Branch Operations require such programs to motivate it’s employees. Newly hired employees are rotated are given on-job-training and are rotated in every department covering every desk so that they get familiar with the functions and operations of the bank apart from being socialized. Socialization is a process of adaptation that takes place as individuals attempt to learn the values and norms of work roles.9 On-job-training places the employees in actual work situations and makes them appear to be immediately productive.10 During this process every existing employee has to cooperate with them explaining their work and posts in the best possible way. Only then they are trained for the specific job for which they are hired. This helps in the proper and deep understanding of the organization. Also, it creates a friendly environment for the new employees helping them to adjust in the new environment. After the in depth orientation of the bank, a senior employee gives guidance through directions, advice and criticism to accelerate the growth of the new employee. This enhances his/her knowledge and expertise and the employee is then ready to take the task. For the existing employees of Branch Operations training courses are conducted on an annual basis for their development. Employees also prepare presentations that further enhance their abilities and increase their confidence. But the employees rarely participate in the presentations. The training programs of the employees and the manager differ. Employees training needs are discussed with the manager on an annual basis. Training solutions are delivered through the on-job coaching by the manager or any other concerned employee and formal training events are organized by either the Training Center or suitable external sources. Nomination for the training program is made only after the discussion of its need with both the immediate manager and the Training Manager.

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The manager and the employees have to satisfy certain prerequisites, that is, they have to give internal exams and prove that they are capable of taking a new course and that they will make best use of it. Citibank also sends its employee abroad for specialized courses in the banking related subjects. But this practice has become very rare due to the shortage of funds. The bank now only sends the employees at the managerial level. The trip ranges from a week to few months. All expenses are beared by the bank itself. The selection of the managers is based on their own personal interests for a particular course and above all his potential and the expectations that the bank has from the manager. Since the Citibank spends its money on the employees, the bank is very careful in selecting the employees for the courses. The bank can only achieve its objectives successfully depending on the employee’s willingness, interest and effort to make best use of the course. Also skills of the employee are also important for the specific training program. Citibank has another benefit of the training courses. The employees can carry out their routine task along with the training because they don’t have to look for other institutes that provide training in the respective area. This prevents the bank from granting them study leaves causing no disruption in the work. The major flaw observed in the selection of employees for the training purposes is politics and favoritism to push the desired employee upwards.

6.10. INTERNEES In almost all the organizations of this day, internees are welcomed due to many reasons. They may get inexpensive help for the operational and administrative activities enabling them to concentrate on other important work. Also, this may help the organization in building its image for educating and training students by giving them a practical and professional environment to work. Secondly, organizations along with good image and getting inexpensive help can reduce the cost of on-job-training by hiring the already trained interns. Many

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organizations keep an eye on their internees and maintain their record. Usually internees who have performed well during their internship are preferred for jobs. Citibank make full use of this opportunity and fully utilize their services all round the year. Like many organizations, Citibank also gets a bit overcrowded with internees. No doubt, the departments have a fixed number of internees and their record is maintained properly but during the summers when most of the educational institutes have an internship requirement for their students, the bank gets crowded. 6.10.1. Selection of Interns Internees can apply directly to the bank or to the department or through Human Resource Department. Those who are interested, submit their C.V’s as early as possible. Internship is offered on the basis of assessment done through the given information in the resume and finally by the interviews. Very few are lucky enough to find an opportunity to work in Citibank due to it’s prestigious image and their relatively strict requirements for internship. 6.10.2. Low Quality work Taken from Interns Like many other organizations, Citibank do take internees who work for them for a short period of time. But usually internees do not have a very good experience in the bank. Internees often get excited to work in a multinational bank, which has an excellent image and professional environment. They are often mistaken by the bank’s attitude towards their customers. They perceive that they will be treated in the similar way. But it is very disappointing for them when they find that the image they had created about the working environment that they will get in the bank is in fact absolutely different. They are in a false perception when they believe that they will get quality work to do, which will enhance their learning and polish their abilities. Usually, internees are engaged in low quality often-clerical work. Filing of the documents is left for the internees. it is often a bad luck for the interns When the

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audit of the bank is near as they give internees the task to complete and check all the documentation and the records kept in files. Internees also have to arrange the files in proper order. In branch operations, internees had to check all the necessary documents in the account opening forms for all the accounts that can be opened by the bank. Account opening forms had to be arranged according to their account numbers and it consumed and wasted internee’s time and effort. Apart from the account opening forms, they also had to complete checking of the records on other desks in the department. In case if any document was missing they had to search for it in all the relevant folders. They had to make the lists of all the account holders showing their account numbers, name of the account holder and the code of the Personal Banker. Every Personal Banker has his own code number which is used instead of their names. These lists were then attached in the folder having the account opening forms along with necessary documents of all the account holders mentioned in the list. Internees were also called from other departments for this purpose that prevented them to get orientation of other departments. By the time they finished this work, their tenure for apprenticeship had already ended. Moreover, internees are also rarely allowed to operate the computer systems for security purposes and due to the fear of losing important data. Any leakage of information from the bank can destroy its image and would make them answerable to their customers decreasing its credibility as well. All the above-mentioned work taken from the internees could never increase their knowledge and understanding about the branch operations and it’s processing. On the other hand, if proper attention is given to the internees it would be very beneficial for them. Thus, it is always unfortunate for the interns when the bank’s audit is near. No doubt, in normal circumstances they have to work in similar areas but the workload doubles in the latter case. This only adds to the disappointment on the part of internees and thus increases their frustration. Many internees also leave

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their internship in the bank if they find another better opportunity to work in some other organization where internees are entertained properly. The kind of work taken from the internees also shows the inefficiency and laziness on the part of the employees for not maintaining the records. The data when kept improperly also wastes the employee’s time in searching for it. 6.10.3. Lack of Intern Training Program Low quality work taken from the interns also brings forward another flaw in the Citibank system, that is, the lack of intern training program. It is an art to make other people work and to extract as much from them as possible especially from temporary employees who are not even paid. This extraction of work can also have a reflection of the intern’s talent and ability that can ultimately give good results. It should also be noted that employees in Citibank are already under stress due to overburden of work. This factor may also lead to unwelcoming attitude towards the internees. The employees have to concentrate on the work that is more important therefore they feel that it would be a mere wastage of time explaining the interns in detail what is required of them. Since the interns who perform well during the apprenticeship are included in the good books of the bank and are then considered for employment, Citibank should have an intern-training program to prevent the wastage of cost and effort of the on-job-training. 6.10.4. Intern Evaluation Internees are under observation throughout their internship by the person to whom they are made subordinates. The supervisor carries out their evaluation in secrecy and is then sent to the Human Resource department in Lahore. This evaluation is recorded and helps them to have some idea of the prospective internee during the selection process.

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Internees get a certificate of completion at the time when they have ended with their internship that gives a brief description of their abilities and attitude towards their work. 6.10.5. Behavior with Interns: Lack of Cooperation Citibank employ interns but is not very friendly to its interns. As a culture of many multinational organizations, Citibank hesitates in giving any type of detail information related to the bank. This creates many problems for the interns especially when they are righting an internship report and need their cooperation. Employees’ attitude is normally very cold with their interns. Interns are entirely dependant on their personal efforts to take out quality work for themselves and to get the relevant information for their internship report. They have to prove themselves to impress their supervisors that if they are given a chance to work in the bank, they will be an asset to them and will be highly committed to their work Internees who succeed in impressing them can think of little flexibility. Others have to face an unfriendly behavior from them. A valid reason for the lack of cooperation from the employees as mentioned earlier is that it may be a preventive measure for the protection of the highly sensitive information which if gets leaked can create trouble for the employees. Due to the very same reason, employees are hesitant to show interns the software that the bank uses for keeping the records of their customers, their transactions and other necessary relevant information. They are rarely given a chance to learn the software and its operation.

6.11. LACK OF MOTIVATION Motivation is the set of forces that cause people to behave in certain ways.11 Many interns in Branch Operations have observed lack of motivation. The employees are no doubt given incentives, bonuses and other rewards on better performances but inspite of the bank’s effort to satisfy their need of self-actualization, many employees in this department are demotivated.

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Unwillingness to work in an organization is a very important problem that needs to be solved at once. The HRM have to identify the main cause and take effective steps for improving the situation. In this present day where human resource has gained much importance and consideration from all over the world for the efficient and smooth running of the organizations, human related problems needs timely solutions. Branch Operations requires normal routine procedures making employees often exhausted and they feel boredom due to the same work routine initiating a need for change. In addition to this, employees are much overburdened. When compared with the salary their work timings and the amount of the work exceeds the bank timings. They have to work overtime to finish it and often the employees leave the bank very late. Favoritism and politics in promotions also frustrate other employees and they are usually found in a bad mood. At times they even talk harshly with other employees who are dependant on them for the completion of their processing. They feel ignored and unimportant reducing confidence and ultimately creating unwillingness to put an effort in their work. Also, employees sometimes leave their work and waste their time in chatting with each other. These factors should be considered and reported by the manager to the Senior Managers or the HRM of the bank to avoid any such problem.

6.12. JOB ROTATION Job rotation is an alternative to job specialization that involves systematically moving employees from one job to another.12 Job rotation is essential in any organization as in the absence of the concerned employee; any other person can carry out his/her work. Job rotation does exist in the bank but it is very rare. Usually, banks require job rotation more than any other organizations to prevent any inefficiency in the

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absence of the employee. Moreover, it is a tool of removing boredom of the employees in the organization. In Citibank job rotation is observed normally at the time of promotion. Discussing specifically Branch Operations, this essential factor is lacking. Employees in this department cannot handle the work of the other desks except the Manager himself. It has been observed that while directing the nonrelated employee in the absence of the associated employee, the manager often gets frustrated as he gets disturbed every time the employee asks for guidance. This affects the functioning of the department, as it cannot afford any obstacles in it’s working.

6.13. IMPROPER ADMINISTRATION IN BRANCH OPERATIONS The managerial style in an organization has a direct impact on the performance, productivity, satisfaction and turnover. While talking about the managerial style of Branch Operations, the manager lacks few qualities of a good manager and a good leader. The important aspect noticed was that the manager cannot handle adverse situations properly and loses confidence in his abilities. He is overcomed by the fear decreasing his chances of finding a solution and defending himself. Employees when observe their manager frightened takes a negative impact. The Branch Operations manager no doubt gives the sub-ordinates proper guidance; treat them with respect and dignity. The only problem is the lack of proper control and inability to face problems. Controlling is very crucial as Subordinates take the manager for granted if he is not able to effectively control the operation and processing of the department Controlling is the management function concerned with monitoring activities. 13 The manager has to keep an eye on the work of other employees for the efficient functioning of the department as a whole. Due to this problem, employees often make mistakes affecting the credibility of the department. Improper management style adversely affects the employees’ morale. Low morale, in turn causes decline

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in productivity and thus affecting the quality of services provided to the customers. Furthermore, the Operations head that is the Senior Manager of this department believes in autocrative leadership style worsening the situation for the Operations Manager. Fear as a management style can accomplish short-term results; the longterm consequences can be devastating. Motivational management produces better results those who focus on positive reinforcement rather than fear and intimidation are the successful managers.

6.14. TECHNOLOGY 6.14.1. Adaptability Citibank has a greater adaptability in acquiring latest technologies. Being a multinational bank it has an easy access to all types of new development that can add to the better functioning of the organization. This acquisition can either be the addition to the physical environment or the computer software’s etc. Implementation of ATMs all round the world is another example. The up to date computer systems along with the advance software that aim at providing greater security and efficient maintenance of records of the customers with the least possible errors proves the greater adaptableness to the new emerging technologies that other local banks lack. Being a multinational, the bank has much more resources that enhance their capabilities to compete in the market. Innovative service methods attract a large pool of customers that triggers the growth rate of the bank. Self Service Banking and Citiphone Banking in Pakistan have further added to the goodwill of the bank. 6.14.2. Slow Networking System Every employee of the bank is of the opinion that the networking system is very slow creating hindrance in the work of the employees. It affects the employee’s work, as they have to feed the data at every next moment.

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All the branches of Citibank in Pakistan are interlinked through Internet with the Karachi server. The Islamabad branch has to create a link with this server. The reason is that all the information is fed on this server, which requires time to access that information. Due to this problem, the communication system slows down affecting the work of the employees. They have to wait for the network to revive. Moreover, the computers have Pentium II processors and needs to be upgraded. By doing this the speed of the system will improve. 6.14.3. Lack of Basic Computer Skills The employees of Branch Operations are not aware of the basics of computer. In the present day where computer has become a necessity of every organization and computer literacy has gained extensive importance, the employees of this department lack knowledge in this field. No doubt, the employees are well aware of the routine use of the computer and the software but a certain deviation from a normal use creates problem. The bank has a technology department whose employees can be called upon if any problem arises either in the hardware or the software of the computer system. These experts are ready to solve the problem every time when they are called for help. Inspite of the availability of experts, the employees should know how to resolve minute problems by themselves to reduce the waistage of time. They have to wait for them and in the meanwhile their time is waisted as all their work is dependant on the computer system. Employees are not even aware of the use of MS-Office that is important for every type of office work in every prosperous organization.

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CHAPTER 7: FINANCIAL ANALYSIS Financial analysis of any organization is the evaluation of the performance of that specific organization with the help of financial statements available in the annual report. Every organization has to prepare the financial statements. Banks prepare it in accordance with the requirement of the SBP under the banking companies’ ordinance 1962. Thus, keeping in view this requirement Citibank N.A, prepares the financial statements annually.

7.1. Accounting Policies of the Bank Financial statements of the bank are prepared in accordance with the requirements of the SBP under the Banking Companies Ordinance 1962. According to the new accounting policy and with the guidelines contained in the SBP (Circular No. 20,dated August 4,2000.) any difference between the carrying value and revalued amount is taken to a surplus/deficit on revaluation account and is shown separately in the balance sheet previously, these investments were carried at cost less amortization of premium or discount. Liability method is used for the bank accounts for deferred taxation. Provisions for non-performing advances are made against specific non-performing advances determined on the basis of the Prudential Regulations issued by SBP and the banks own criteria. The cost for fixed assets is depreciated over the useful lives of the related assets under the straight-line method for vehicles and the diminishing balance method for building, furniture and equipment. Markup/interest on advances and investments is recognized on an accrual basis except in the case of non-performing advances. Assets and liabilities in the foreign currency are revalued daily into rupees using spot rate published by the SBP. Forward exchange contracts related to foreign currency deposit for which forward cover is taken fro the SBP are revalued using the straight-line method.14

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7.2. Balance Sheet Analysis The analysis of the balance sheet of Citibank N, A. is done keeping in view the figures available in the annual report of Citibank N.A, for the financial year 1999 and 2000. Balance sheet is the summary of a firm’s financial position on a given date that shows total assets, total liabilities and owner’s equity.15 7.2.1. Assets Side Asset side shows an overall increase of 3.05%. This is mainly due to the increase in the balances with other banks that offsets other negative changes in the balance sheet eventually giving positive results. These changes are discussed in detail as under: A decrease in Cash is observed in the financial year 2000. It was mainly due to the substantial decrease in the Cash in Hand both in the local and foreign currency. On the other hand, deposits with the SBP have increased but couldn’t offset the decrease in the cash in hand resulting in the overall decrease in cash of -4.6%. Balances with Other Banks have increased sharply and a change of about 680% is observed. It was due to the increase of balances in both the current and placement accounts in the banks within Pakistan while a decrease is observed in the balance with the banks outside Pakistan. Money at Call and Short Notice also showed a considerable increase of about 250%. The ratio of balances with other banks and money at call and short notice should be 68:32 as the requirements set by the SBP. However, Citibank has a ratio of 44.38:55.82 in the FY 2000 and a ratio of 26.20:73.79 in the FY 1999 showing considerable improvement. Investment shrinked to -3.2% in the fiscal year 2000 due to the decrease in securities invested in the Federal and Provincial government securities. Operating Fixed Assets decreased mainly due to the disposal of the vehicles to the executives and high accumulated depreciation for building at freehold land, office equipment, furniture, vehicles, fixtures, for the year 2000. Other Fixed Assets also depicted a prominent decrease of -20.80%.

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Liabilities Side Decrease in the saving deposits has found to be the major cause of decline in the overall Deposits of the bank. The figure shows a substantial increase of 105% in the Borrowings from other Banks. This was mainly due to the borrowings from the banks within Pakistan in local currency. The Net Assets shows a negative figure in both the FY 1999-2000. However an increase in the net assets has been observed in the FY 2000.

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Table 7.2. Percentage Change in Assets, Liabilities and Shareholder’s Equity. ASSETS Cash Balances with other Banks Money at Call and Short Notice Investments Advances-Net of Provisions Operating Fixed Assets Other Assets LIABILITIES Deposits and Other Accounts Borrowings from other Banks, Agents, etc. Bills Payable Other Liabilities Net Assets Represented by: Head Office Capital Account Accumulated Loss Surplus on Revaluation of Investments Memorandum Items: Bills for Collection Accept., Endorse. and other Obligations Contingent Liabilities and Commitment

31-Dec-99 Rs. In “000” 7,368,481 35,502 100,000 12,477,613 21,501,323 484,708 5,080,892 47,048,519

31-Dec-00 RS. In “000” 7,028,202 276,981 350,000 12,073,423 24,296,271 438,753 4,023,962 48,487,592

%age Change -4.6% 680% 250% -3.2% 12.99% -10.47% -20.80% 3.05%

38,800,980 2,503,076 520,004 5,690,461 47,514,521 (466,002)

36,158,239 5,134,603 465,084 6,808,545 48,566,471 (78,879)

-6.81% 105% -10.56% 19.64% 2.21% 83.07%

(466,002) (466,002)

(86,370) 7,491 (78,879)

439.54% 100% -83.07%

1,817,491 3,680,129

2,074,731 1,689,142

14.15% -54.10%

Source: Based on figures available in the financial statements, Citibank N.A, 1999 and 2000.

7.3. INCOME STATEMENT ANALYSIS 7.3.1. Gross income side This side shows an overall increase of 11.28% in the FY 2000. The Mark up and Interests declined to -15.5% but the negative impact was reduced by an increase in the Cost on Deposits of 23.73%. The major loss of the bank was observed in the reduced Profit over its Investments that was -47.63% as it decreased to 59

Rs. 3,339 in 2000 from Rs. 6,376 in 1999. Other Operating Income also increased to 4.73% due to the losses recovered from credit. 7.3.2. Expense Side The income statement shows the negative figure in the expense side of both the financial years under consideration. This shows a high expenditure in operating expense and accumulated losses have been reduced to 11.7%. Provision for nonperforming Advances, has been controlled and has eventually reduced the losses as the figure changed from Rs.55, 844 in 1999 to Rs. (41, 930). The bank has controlled the Administrative Expenses by a reducing the salaries, allowances and other benefits given to the employees. A sharp increase in the expenditure is observed for advertisements and publicity of the bank although donations, legal charges and rentals of operating leases have been controlled and reduced. Provision for Letter of Credit and Guarantee has also decreased remarkably to -89.5% reducing the overall figure of the expenses.

7.3.3. Net Profit Side The Profit after Taxation shows a healthy rise of 122.78% in 2000. A substantial amount of Accumulated Loss is Brought Forward that cannot be offset by the profit after taxation in FY 1999. However, the Accumulated Loss Carried Forward to the FY 2001 is less as compared to that of the year 2000. Provision taxes were paid in the FY 1999, which is one of the main reasons for high losses of the bank.

60

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7.4. NET CASH FLOW 7.4.1.Cash Flow from Operating Activities Citibank shows a negative outflow for operating activities for both the FY 1999 and FY 2000. However, the bank was able to overcome its losses in the FY 2000 but was unable to increase the cash flow from operating activities and to pull it from the negative slope to the positive one. The percentage difference observed was 422% but could not support the liquidity position of the bank. An outflow of Rs. 1,862,803 is observed for the operating assets in the FY 2000 with a net change of (118)%.

7.4.2. Cash Flow from Investing Activities Investing activities at Citibank showed net outflow of Rs. (132,271) million in FY 2000 against Rs. (66,348) million in FY 1999 mainly due to substantial increase in the advance against subscriptions and fixed capital expenditure. 7.4.3. Cash Flow from financing activities Increased borrowings from other banks have raised the net inflow from financing activities. Cash inflow has increased to 300.3% depicting the use of short-term funds to offset the outflow in the operating activities.

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7.4. Percentage Change in Net Cash Flow Cash Flow from Operating Activities

31-Dec-99

31-Dec-00

%age

Profit Before Taxation

1,032,207

516,219

99.95%

(3,339)

(6,376)

(47.63)%

1,028,868

509,843

101.8%

Depreciation

115,926

183,596

(36.86)%

Provision against non-performing Advances

(41,930)

55,844

(175.1)%

-

2,508

100%

909

138

558.7%

7,185

69,000

(89.59)%

Bad Debts written of Directly

173,171

163,852

5.69%

Net profit on Sale of Fixed Assets

(3,959)

(605)

554%

Fixed Assets written off

16,259

36,524

55.5%

267,561

510,857

47.6%

1,296,429

1,020,700

27%

(2,926,189)

133,818

(2286.7) %

Government Securities

465,020

10,429,121

(95.54) %

Other Assets(excluding advance tax)

598,366

(224,186)

(367) %

(1,862,803)

10,338,753

(118) %

(2,642,741)

(10,503,055)

(74.84) %

(54,920)

132,438

(141.5) %

Less: Profit from Investment Securities

Adjustment for non Cash Charges:

Provision for Diminution in value of Investment Provision for write-down in Value of non-banking Assets Provision against Letter of Credit and Guarantee

(Decrease)/Increase in Operating Assets: Advances

(Decrease)/Increase in Operating Liabilities: Deposits and other Accounts Bills Payable

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Other Liabilities

1,110,899

(325,803)

(441) %

(1,586,762)

(10,696,420)

(85.2) %

(2,153,136)

663,033

(424.7) %

(190,245

(1,111,936)

(82.9) %

(2,343,381)

(448,903)

422%

Advance against Subscriptions

(50,000)

-

-100%

Fixed Capital Expenditure

(116,391)

(94,079)

23.7%

34,120

27,731

23.04%

(132,271)

(66,348)

99.4%

2,631,527

703,435

274%

(4,675)

(47,256)

(90.11) %

2,626,852

656,179

300.3%

151,200

140,928

7.3%

7,503,983

7,363,055

1.9%

7,655,183

7,503,983

2%

7,028,202

7,368,481

(4.62)%

Balances with other Banks

276,981

35,502

680%

Money at Call and Short Notice

350,000

100,000

250%

7,655,183

7,503,983

2.02%

Cash Flow before Tax Income Tax Paid Net Cash Flow from Operating Activities CASH FLOW FROM INVESTINGACTIVITIES

Sales Proceed of Fixed Assets Net Cash used in Investing Activities CASH FLOW FROM FINANCINGACTIVITIES Borrowings from Other Banks Agents etc. Remittance to Head Office Net Cash Inflow from Financing Activities Increase in Cash and Cash Equivalents for the Year Cash and Cash equivalents in the Beginning of the Year Cash and Cash Equivalents at the end of the Year Cash and Cash Equivalents Cash

Source: Based on Figure available in Annual Report, Citibank N.A, 1999 and 2000.

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7.5. FINANCIAL RATIOS 7.5.1 Liquidity Ratios Liquidity ratios measure the firm’s ability to pay of short-term debt. 16 Cash ratio shows only a slight increase in the FY 2000 Current Ratio doesn’t show a healthy sign as it is not according to the requirements set by the SBP, to maintain the ratio at 1. In FY 2000, the bank had a current ratio of 0.34 that has slightly increased from 0.29 in the FY 1999. Citibank’s current ratio depicts that it is not utilizing its current assets relative to its liabilities and is unable to meet the requirements set by the SBP. Moreover the bank has a very unstable liquidity position, as it is unable to fulfill the central bank’s obligation. 7.5.2. Profitability Ratios These ratios indicate the firm’s overall effectiveness of operation.17 The profit Margin ratio shows a healthy sign for 2000 as the return on markup has increased. The ratio for the Return on Assets increased from (0.007)% to 0.008% that shoes an efficient utilization of assets eventually improving the earning power. The Return on Equity ratio for Citibank has decreased. The decrease in return on equity ratio depicts that the utilization of equity in generating net profit has drop off. Decline in the return on equity has also improved the bank borrowings that eventually have increased the liquidity of the bank. 7.5.3. Asset Utilization Ratio Citibank has a high Receivable Turnover in the FY 2000. It depicts the success of the bank in collecting its receivables in time. Fixed Asset Turnover and the total asset turnover has decreased in the FY 2000 showing the reduced contribution of fixed and total assets in the generation of sales. Payable Turnover of the bank has also decreased showing the increase in time required to pay off its credits.

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Table-7.5. FINANCIAL RATIOS RATIO/MEASUREMENT

31-Dec-99

31-Dec-00

Cash Ratio

0.31

0.29

Current Ratio

0.29

0.34

Profit Margin

(0.06)%

0.84%

Return on Assets

(0.007)%

0.008%

Return on Equity

0.71%

(4.872)%

Receivables Turnover

39.84

7.24

Fixed Asset Turnover

0.136

0.112

Total Asset Turnover

0.115

0.094

Payable Turnover

1.62

0.601

Liquidity Ratios

Profitability Ratio

Asset Utilization Ratio

Source: Based on Figure available in Financial Statements, Citibank N.A, 1999 and 2000.

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7.6. Graphical Representation of Growth/Loss

7.6.1. Balances with Other Banks (Rs.000)

6000000 4000000 2000000 0 2000

2001

Balances with other banks have decreased by 57.2% and has caused considerably in decreasing the current assets of the bank.

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7.6.2. Other Assets (Rs. 000)

2001

2000

0

5000000 10000000 15000000

Other assets have decreased and a net change of 15.8% is observed. Eventually, this has affected the overall fixed assets of the bank. Thus, the fixed assets of the bank have lessened in the FY 2001.

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7.6.3. Borrowings from Other Banks (Rs. 000)

2001 2000 0

5000000 1000000 1500000 2000000 0 0 0

Borrowings from other banks have decreased. The net decrease in the borrowings from other banks observed is 88.8%, which has in turn caused the current liabilities to decrease.

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7.6.4. Net Assets (Rs. 000)

8000000 6000000 4000000 2000000

2000

2001

0

Net assets have increased in the FY 2001 and a net change of 18.79% is observed. This is due to the greater increase in the total assets.

70

7.6.5. Profit after Taxation (Rs. 000)

2001

2000

0

500000

1000000

1500000

. A net change of 33.7% is observed that shows a healthy sign. This is due to the significant increase in the net mark up interest income after provisions.

71

7.6.6. Total Assets (Rs. In millions)

2001 2000

0

50000 100000 150000 200000

Total asset has increased by 6.6 % which is due to the significant increase in net investment and in current assets.

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7.6.8. Deposit Growth Ratio (Rs. 000)

200000000 150000000 100000000 50000000 0 2000

2001

Deposits of the bank have increased by 12%. This is mainly due to the increase in the saving deposits of the bank.

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7.6.9. Advances Growth Ratio (Rs. 000)

100000000 80000000 60000000 40000000 20000000 0 2000

2001

The net advances of the bank have been decreased by 12.7%. This has, to some extent, caused the total assets to decrease.

74

REFERENCES

75

1

Griffin, Ricky W., (1997). Management. Fifth Edition. USA: Houghton Mifflin Company. p.582. Ibid.p.524. 3 Werther, Jr., William B. and Davis, Keith, (1996). Human Resources and Personnel Management. Fifth Edition. USA: Mc-Graw-Hill, Inc. 4 Griffin, Ricky W., (1997). Management. Fifth Edition. USA: Houghton Mifflin Company. p.540. 5 Ibid. p.540. 6 Ibid. p.544. 7 Ibid. p.551. 8 Decenzo, David A. and Robbins, Stephen P., (1996). Human Resource Management. Sixth Edition. USA: John Wiley & Sons Inc. p.468. 9 Ibid. p.220. 10 Ibid.p.230. 11 Griffin, Ricky W., (1997). Management. Fifth Edition. USA: Houghton Mifflin Company. p.474 12 Ibid. p.295. 13 Decenzo, David A. and Robbins, Stephen P., (1996). Human Resource Management. Sixth Edition. USA: John Wiley & Sons Inc. p.468. 14 Citibank N. A, (2000). Financial Statements, Karachi. 15 Van Horne, James C. and Wachowicz, JR., John M., (1998). Fundamentals of Financial Management.Tenth Edition. USA: Prentice-Hall,Inc. p.121. 16 Block, Stanley B. and Hirt,Geoffry A., (1994). Foundations of Financial Management. Seventh Edition. USA: Richard D.Irwin, Inc. p.54. 17 Ibid.p.140. 2