Post on 11-Jan-2016
CONTEMPARY ISSUES RELATED
TO INDUSTRY
ARMY WELFARE TRUST (AWT) -
CASE STUDY
MEHAD AZEEM
ASIM BASHIR WARRAICH
ASIM QAYYUM
Engineering Management
Department
Center for Advanced Studies in
Engineering,
Islamabad – PAKISTAN
2 ARMY WELFARE TRUST – A CASE STUDY
SESSION 2010-2011
Management of Technical Organizations & Practices
3 ARMY WELFARE TRUST – A CASE STUDY
CONTEMPARY ISSUES RELATED
TO INDUSTRY
ARMY WELFARE TRUST (AWT) -
CASE STUDY
Undertaken By:
MEHAD AZEEM
REG. NO. SP2009/MSC EM/138
ASIM BASHIR WARRAICH
REG. NO. FA2008/MSC. EM/CE/106
ASIM QAYYUM
REG. NO. FA2010/MSC. EM/143
Supervised By:
MR. Khusro P. Malik
Management of Technical Organizations & Practices
4 ARMY WELFARE TRUST – A CASE STUDY
DEDICATION
To our Loving Parents and
Teachers without their help and
support this effort would not
have materialized
Management of Technical Organizations & Practices
5 ARMY WELFARE TRUST – A CASE STUDY
ACKNOWLEDGEMENT
Here I must appreciate the efforts of our worthy Instructor
Mr Khusro Pervaiz Malik and Teaching Assistant
Mr Faisal Shafique But without their help and support this
activity would not have given the desired dividends. The
close cooperation and support provided by the staff of
ASKARI COMMEICIAL BANK specially the Branch Manager
AWT Plaza Mr Sher Afgan Khan , Manager Operations
Mr Syed Nadeem and Country Head
HR Mr Zahid Chaudry. It will be unjust if I forget Branch
Manager Askari Commercial Bank Tufail Road Lahore
Branch Mr Akmal Wajid along with Manager Operations MR
Amir Riaz Raja.
Management of Technical Organizations & Practices
PROJECT BRIEF
PROJECT NAME CONTEMPARY ISSUES RELATED TO INDUSTRY ARMY WELFARE TRUST (AWT) - CASE STUDY
ORGANIZATION NAME ARMY WELFARE TRUST (AWT)
OBJECTIVE SET OUT THE WAY FORWARD, PREPARED IN LIGHT OF THE FINDINGS OF THE DIAGNOSTIC REVIEW OF AWT AND ITS BUSINESS UNITS (BUs)
UNDERTAKEN BY MEHAD AZEEM
ASIM BASHIR WARRAICH
ASIM QAYYUM
SUPERVISED BY FAISAL SHAFIQUE BUT
TEACHING ASSISTANT
ENIGNEERING MANAGEMENT DEPARTMENT
CENTER FOR ADVANCED STUDIES IN ENGINEERING, ISLAMABAD – PAKISTAN
STARTED ON OCT 2010
COMPLETED ON DEC 2010
7 ARMY WELFARE TRUST – A CASE STUDY
ABSTRACTManagement is a process of designing & maintaining environment in which
individuals, working together in groups, efficiently accomplish selected aims. In other words
we can define the term management as the process of using “Organizational resources” to
achieve the Organization’s goals through planning, organizing, controlling and leading.
Management audit is done when the company or the given project deviates from its goals at
large and the outcome is not as desired; thereby ascertaining the areas where the fault lies.
From the finding of the audit the restructuring as well as reforms are introduced.
In this case study an attempt will be made to discuss the working direction, role of
each department and the role of skilled labor prevailing in AWT. Different management
techniques and tools for the highlighting all the good and bad practices will be used. Apart
from SWOT analysis and Balance Score Card, an endeavor will be made to collect
information/ data directly from employees through Questionnaire. After carrying out in-depth
analysis including operational philosophy of AWT, the panel will be suggesting different
measures and broad outline of restructuring plan as essential ingredients of the ‘Way
Forward’ for AWT.
Management of Technical Organizations & Practices
8 ARMY WELFARE TRUST – A CASE STUDY
Management of Technical Organizations & Practices
TABLE OF CONTENTS
1. AWT – An Overview .…………………………………………………….......... 8
1.1. Historical Perspective …….…………………………………………….. 9
1.2. Objectives ………………………………………………………………. 9
1.3. Management ………………………………………………………......... 9
1.3.1. COA ……………………………………………………..........10
1.3.2. BOD .……………………………………………………..........10
1.3.3. BUs .……………………………………………………….......12
1.3.4. Finance Division …………………………………………........13
1.3.5. Workforce ………………………………………………........14
2 Analysis ……………..……………………………………………………..........16
2.1. Appraisal of AWT Functioning ………………………………………. 17
2.1.1. Governance ………………………………………………........19
2.1.2. Mission & Vision ………………………………………....... 19
2.1.3. Business Management …………………………………......... 20
2.1.4. Investment Management …………………………………...... 21
2.1.5. HRM ……………………………………………………......... 24
2.1.6. Internal Audit ……………………………………………......... 26
2.1.7. MIS.....…………………………………………………..….......27
2.2. Management Audit Tools………………………….………………...... 29
2.2.1. SWOT Analysis ….………………………………………....... 29
2.2.2. Balanced Score Card ……………………………………........ 37
2.2.3. Comparison of Benefits ………………………………….........41
3 Way Forward
3.1. Suggested Measures ………………..………………………………........57
3.1.1. Expansion of COA …...……………………………………........57
3.1.2. Core Teams ......……………………………………………........58
3.1.3. Revised role of BOD ………………………………………........60
3.1.4. Improvement in Organizational Structures ….……………........61
3.1.5. Improvement in Planning Process ……………………….........61
3.1.6. Investments ....……………………………………………..........63
3.1.7. HRM……………………………………………………….........64
3.1.8. MIS ………………………………………………………..........65
3.1.9. Finance ……………………………………………………........66
10 ARMY WELFARE TRUST – A CASE STUDY
3.2. Propose restructuring plan …………………………………………........68
Management of Technical Organizations & Practices
CHAPTER 1
AWT – AN OVERVIEW
12 ARMY WELFARE TRUST – A CASE STUDY
CHAPTER 1
1.1 Historical Perspective
Army Welfare Project started with a modest asset base and high ambitions. AWT is a
story of perseverance, innovation, business acumen and going beyond the frontiers in Banking,
Cement, Insurance, Aviation, CNG, Agriculture, Manufacturing, Sugar, Security Solutions, Real
Estate, Lubricants, Defence Procurement and Trading and many other diverse fields. Army
Welfare Project Fund was established in 1971 and was registered under the Societies
Registration Act XXI of 1860. The name was subsequently changed to Army Welfare Trust
(AWT) during 1974. The primary sponsor of AWT is the Welfare and Rehabilitation (W&R)
Directorate, General Headquarters, Pakistan Army.
1.2 Objectives
Primary objective of AWT as stipulated in the Administrative instructions of 1972 is:
"Objective of the Trust is to undertake safe and profitable commercial activities in a manner that
portrays AWT's image as a respected market leader while generating maximum funds for
meeting the welfare requirements of the Army."
1.3 Management
1.3.1 Committee of Administration (COA)
Its composition is as under:
a) Adjutant General - Chairman
b) Chief of General Staff - Member
c) Quarter Master General - Member
d) Master General of Ordinance - Member
e) Managing Director, AWT - In attendance
f) Secretary AWT - Secretary
Management of Technical Organizations & Practices
13 ARMY WELFARE TRUST – A CASE STUDY
The present COA is as under:-
a) Lt. Gen. Nadeem Taj Chairman
b) Lt. Gen (R) Imtiaz Hussain Chairman Executive
Committee
c) Maj Gen (R) Saeed Ahmed Khan Director
d) Mr. Zafar Alam Khan Sumbal Director
e) Dr. Bashir Ahmad Khan Director
f) Mr. Shahid Mahmud Director
g) Mr. Muhammad Riyazul Haque Director
h) Mr. Ali Noormahomed Rattansey Director
i) Mr. Wazir Ali Khoja ( Nominee NIT ) Director
j) Mr. Muhammad Rafiquddin Mehkari President & Chief Executive
k) Mr. M. A. Ghazali Marghoob Company Secretary
The COA is responsible for overall administration of AWT. Primary functions of
the COA as defined in the AWT Head Office procedures are as follows:
a) To administer the affairs of Army Welfare Trust.
b) General policy making.
c) Approval of annual budget and accounts.
d) Approval of investments in new projects and disinvestments.
e) Control of appointment and removal of Managing Director and Directors.
f) Formulating terms of service of Managing Director and BOD.
1.3.2 Board of Directors (BOD)
The responsibilities of the Board of Directors as stipulated in AWT
Administrative Instructions (1972) are as under:
Management of Technical Organizations & Practices
14 ARMY WELFARE TRUST – A CASE STUDY
a) To formulate executive policy for the conduct of Management of the
organization on behalf of the Committee of Administration.
b) To lay down broad lines for the guidance of sectional policy (financial,
production, marketing, personnel, research, public Relations etc), within
the framework of the general policy of Committee of Administration.
c) To ensure that the legal obligations of the Organization and its Projects are
appropriately discharged.
d) To maintain a continuous control of the Projects’ affairs, using tools like
periodical reports, accounts and statistics, submitted by the Project Head
with the data received from the General Managers/Managers of
projects/Farms/Enterprises, in order to ensure that the organizational
policies are being properly implemented.
e) Within the frame work of the policy to authorize capital expenditure and
the disposition of profits or losses arising, in the conduct of the project’s
affairs including sanction for purchase and sale of land, buildings or other
assets and the custody of projects/firms/enterprises/property.
Salient features of the originally envisaged above mentioned role of the
Board are:
a) Strategic planning;
b) Policy formulation;
c) Legal protection;
d) Monitoring the performance of projects and investments; and
Capital expenditure and authorization
Affairs of the Trust are managed by Board of Directors (BOD) led by the
Managing Director (MD) of AWT. The BOD members also act as Divisional Heads and
are actively involved in the operations of the Business Units (BUs) of AWT.
Management of Technical Organizations & Practices
15 ARMY WELFARE TRUST – A CASE STUDY
1.3.3 Business Units
Operations of AWT are spread over 22 industries comprising 33 units. Equity of
AWT has been financed through W&R Directorate funds and includes general, capital
and revaluation reserves. Currently, the net sponsor's equity is marginally negative based
on the book value of investments. The activities of AWT are spread over the following
sectors:
a) Agriculture.
b) Real Estate.
c) Financial services.
d) Manufacturing.
e) General Services.
AWT currently owns or has shareholding in the following BUs; details of their
performances are given as under:
a) Askari Commercial Bank Ltd.
b) Askari Aviation (Pvt.) Ltd.
c) Askari Leasing Ltd.
d) Askari Guards (Pvt) Ltd.
e) Askari CNG Project
f) Askari Information Systems (Pvt.) Ltd.
g) Askari Commercial Enterprises
h) Army Welfare Sugar Mills Badin
i) Army Welfare Rice Mills
j) Army Welfare Shoe Project
k) Army Welfare Hosiery Project
l) Army Welfare Woolen Mills
Management of Technical Organizations & Practices
16 ARMY WELFARE TRUST – A CASE STUDY
m) Askari General Insurance Co. Ltd.
n) Askari Associates (Pvt.) Ltd.
o) Askari Securities Ltd.
p) Blue Lagoon
q) Army Stud Farm Probynabad
r) Army Farm Rakhbaikunth
s) Army Stud Farm Boyelgunj
t) Army Farm Khoski
u) Al-Ghazi Travels
v) Services Travels
w) Real Estate Project Lhr
x) Liaison Office Lhr
y) Real Estate Project Rwp
z) Real Estate Project Khi (Plaza)
aa) Askari Pharmaceuticals
bb) Askari Cement Ltd. Wan
cc) Nizampur Cement Project
dd) Commercial Market Project
ee) Magnasite Refectories Ltd.
ff) Askari Power Ltd.
gg) Mobil Askari Lubricants Ltd.
hh) AWT Plaza Rawalpindi
1.3.4 Finance Division
The Finance Division is responsible for the functioning of a proper system
of financial controls at the Head Office / BUs of the AWT, while the other
Management of Technical Organizations & Practices
17 ARMY WELFARE TRUST – A CASE STUDY
Divisions are responsible for the functioning of respective BUs. The Divisions
monitor day to day operations of BUs based on the reports received. The
frequency of these reports varies according to the requirements of the Divisional
Management. Production and sales data from major projects is reported on a daily
basis to the Divisional Management, while other performance and financial data is
reported in a consolidated form over a longer period of time. The Division's
Management is mainly involved in day to day operations of BUs. The core
business planning at AWT for its BUs is the budgeting exercise which takes place
at the start of each year. Usually no revisions are made to the budgets and
variances are a common and accepted norm in the organization. Except for BUs
operating in the financial sector, generally the Divisional Heads are responsible
for the performance of units under their operational control even at the BOD
level.
1.3.5 Workforce
The workforce is a mix of the civilian and ex military personnel. Total
manpower employed by AWT group is 5130.
Management of Technical Organizations & Practices
18 ARMY WELFARE TRUST – A CASE STUDY
Table 1.1
Fig 1.1
Management of Technical Organizations & Practices
Army Personnel
Civilians Off / Staff Ward
Total % in Total% in total
Head Office 133 82 11 226 4.41
Industries Div Project
192 988 43 1223 23.84
Army Projects 56 102 02 160 3.12
Farm Division Project
153 1154 41 1348 26.28
Real Estate Division Project
49 82 05 136 2.65
Financial Institution
124 1565 145 1834 35.7
Others 93 100 10 203 3.95
Total 800 4073 257 5130 100
% in Total 15.59 79.40 5.01 100
19 ARMY WELFARE TRUST – A CASE STUDY
CHAPTER 2
ANALYSIS
Management of Technical Organizations & Practices
20 ARMY WELFARE TRUST – A CASE STUDY
CHAPTER 2
2.1 Appraisal of AWT Functioning
2.1.1 Governance
COA in its present form is highly dependent upon the input from the BOD
of AWT. Investment decisions in the past have been taken on investment briefs
and presentations made to COA. At times it appears that these investment
proposals were not supported by professional feasibility studies. It seems that
AWT has not been able to define its strategic direction as yet; this notion is
evident from the fact that the expansion of AWT resulted in investments in 33
different BUs in 22 sectors. Such a diversified investment portfolio may be the
result of a lack of strategic direction and focus. AWT has failed to create a
corporate culture and HR policies are generally suitable for public sector
organizations, reflecting deficiencies in the Global policy.
Head Office of AWT is divided into seven Divisions and a Secretariat.
Each Division is headed by a Director, who reports to the Managing Director of
AWT. Each Division and the Secretariat, other than the Finance Division, are
generally entrusted with the Management of their respective BUs. Currently, most
of the Directors are directly involved in the day to day management of projects
under their purview and are acting as executors, which is different from the
previous practice in which Directors were primarily involved in coordinating
activities only. This change has been gradual and taken place over a number of
years. This change has not had a positive effect on the performance of AWT as
the time spent on planning and coordination is now being spent on execution of
day to day tasks. The Board also frequently meets, primarily to take business unit
level operational decisions. Other strategic decisions like capital expenditure and
hiring of key personnel are also under their responsibilities.
The current role of the Directors, which in turn is the role of the Head
Management of Technical Organizations & Practices
21 ARMY WELFARE TRUST – A CASE STUDY
Office of AWT, is predominantly operational and control oriented. This role is
quite different than the one originally envisaged by the sponsors of AWT, given
in the Administration Instructions 1972 of AWT, as reproduced below.
It is evident from the above that the Committee of Administration had
envisaged a specific role for AWT Head Office that would function as a corporate
parent. The transformation of AWT BOD from parental to an operational role is
unjustified on the following grounds:
a) Running of operations require pertinent and relevant industry expertise,
experience, education, competencies and skills.
b) Involvement of Directors in the day to day affairs of the project is a major
deviation from the monitoring function.
c) The executor cannot monitor his own tasks effectively.
d) Decision-making at Board level regarding the projects, subsidiaries,
associates cannot be guaranteed to be impartial and unbiased because it
can be fuelled by self interest.
e) The Directors are subordinates of the Managing Director but are expected
to take joint decisions at BOD level.
The Board of Directors and the MD is inducted into AWT on fixed term
contracts. The MD has even a lesser term of 3 years as compared to other Directors
who are inducted for 5 years. Continuity of policies is a vital component of success
and frequent changes at the top level has caused the problem of continuity of
policies due to the power structure at BOD level. Current composition of the Board
of Directors gravitates heavily towards administration and management, while
industry expertise and experience is generally lacking. Fixed term tenures also
nullify the benefits of learning curve particularly when a Board Member is
removed after he has become fully conversant with the policies procedure and the
business operations.
As explained earlier at present the BUs of AWT are extensions of the Head
Office and in most of the cases Head Office exercises excessive control over BUs.
Management of Technical Organizations & Practices
22 ARMY WELFARE TRUST – A CASE STUDY
Other than the financial sector in BUs owned by AWT, almost none of the BU is
headed by professionals having pertinent industry background and experience.
Lack of business acumen at BU head level restricts the operational capabilities of
respective units.
Centralization of authority is another problem faced by BUs and they do
not feel empowered even to achieve their own budget targets. HR base at the BUs
is generally not in line with the demands of respective businesses. Like in the case
of Head Office AWT, the key positions of the BU levels have generally been filled
by non technical and non-professional incumbents.
Performance targets at BU levels are generally set in financial terms in
shape of budgets and quality of results is totally ignored. There is also a problem
with setting performance measures at team and individual levels, though job
descriptions exist, incumbents and teams are generally not aware of their own
performance targets
2.1.2 Mission & Vision
Vision and mission statements set the destiny and future course of an
organization and without these, an entity has no defined future course of action or
target. Every organization has a purpose, and should have devised plans to
achieve its ultimate purpose or goal. Unless every member of the team explicitly
knows this purpose, the direction of the organization cannot be set and will lose
focus. AWT does not have an agreed strategic mission or vision statement or its
strategic intent. Each Member of the Management has his own perceived mission
or vision. However, there is a consensus among the Members of the Management
that the purpose of the Trust is to generate funds for the welfare of personnel of
army and their families. It is also felt that the creation of employment for retired
personnel is another aim of AWT. There is also confusion on the role of welfare
at AWT, to the extent whether the welfare is through providing employment to
the retired army personnel or generating funds for welfare, or both. The absence
of agreed mission, vision and strategic intent has created fundamental problems
Management of Technical Organizations & Practices
23 ARMY WELFARE TRUST – A CASE STUDY
such as of organizational objectives, poor planning, and loss of focus.
2.1.3 Business Management
The planning process at AWT is restricted to an annual budgeting
exercise, which is carried out during the last quarter of the financial year of AWT.
In case of some projects, long term business plan are also prepared but their scope
is limited. The emphasis of the budgets is on operational costs, capital expenditure
and revenues. No clear defined guidelines have been laid down for the budgeting
at the Head Office level. The basis and assumptions of budgets are not
documented and supported. The whole emphasis of the budgeting exercise is the
control of operational costs. On the other hand major projects have huge cost
overruns e.g. CNG project, pharmaceutical project for one reason or another
which are not investigated in detail to determine the causes thereof. Revenues and
profits are also integral part of the budget, considerable variances have been
observed between profits targeted and achieved revenues and profits. This
variance are usually identified during the quarterly budget review meetings but no
significant corrective action is taken, therefore making the budgeting exercise and
quarterly review exercises redundant. The minutes of the budget meetings are
found to be general and not very specific to the issues raised. We have not found a
system for monitoring implementations of the suggestions made in the budget
meetings.
Budgeting is the only tool of planning and long term strategic planning is
non existent. Corporate level planning exists to a limited extent at the Corporate
and Development (C&D) Division. The C&D Division is responsible for the
implementation of all new investment initiatives. Due to limited in-house
capabilities corporate planning is deficient. Cost and profit centre concept does
not exist at majority of the BUs and at AWT and the Managers are not held
accountable for their inability of meeting financial goals. Lack of planning has
restricted their ability to anticipate future events and accommodate for it. It is
essential that planning may be done on a short, medium and long term basis.
Management of Technical Organizations & Practices
24 ARMY WELFARE TRUST – A CASE STUDY
Further, detailed budget variance analysis is not carried out, to identify and
evaluate the reasons for variances from the budgeted targets, which consequently
leads to limited, if any, action taken on the basis of budget variances. Therefore,
overall performance appraisal and reward and punishment system is not linked
with achievement of budgetary targets.
There are no defined performance evaluation criteria at all. Presently,
budgets are the only means for performance evaluation which, too, lack emphasis.
Project performance is reviewed on the basis of financial results only during
Board meetings.
Macro analysis of AWT portfolio is not conducted and is based upon
individual project performance. No effort has been made to generate project
synergy and projects are viewed as individual units rather than as part of an
overall structure. AWT does not have a Treasury Department and the treasury
function is carried out by the Finance Division. All excess funds from projects are
transferred to the AWT Head Office.
2.1.4 I nvestment Management
Up until 1991 AWT was a successful and profitable business house with a
limited extent of operations i.e. owned and managed eight BUs with asset base of
Rs. 1.493 billion thereby yielding profits of Rs. 113 million. The situation
completely reversed in 2002 and AWT found itself in all sorts of problems. Loss
for the year was Rs. 1.46 billion, asset base was Rs. 19.8 billion and it managed,
owned 33 BUs with total debt exposure of around Rs. 21.144 billion.
After 1991 AWT embarked on expansion and kept on adding to the
number of its portfolio and now the portfolio of AWT is diversified among 22
business sectors. Substantial investments were made in cement and
pharmaceutical sectors but these BUs failed to produce any returns for AWT,
instead BUs in both these sectors became a burden on AWT and caused huge
drain of financial resources. Investments in the financial sector proved profitable
Management of Technical Organizations & Practices
25 ARMY WELFARE TRUST – A CASE STUDY
and are giving reasonable returns. However, cement sector has started to perform
recently and AWT is now covering its incurred losses.
The failure of investments in cement sector can partially be attributed to
external factors. Since mid 90’s cement sector has been facing the dilemma of
over capacity and at the end of 2002 production capacity of cement in Pakistan
was approximately 7 million tons more than the demand. Latter events show that
internal factors and organizational capabilities of AWT also played vital role in
non-performance of investments in the cement sector. Investment decisions at
times were taken without proper research, market surveys and industry analysis.
The decision to setup line II of NCP was taken without conducting any feasibility
study at all. The timing of taking further exposure in cement by installing line II
of NCP and purchasing Askari Cement Wah is also debatable as at that point of
time the market started sliding towards recession.
Project implementation has also been a weaker link in AWT’s
establishment. The decision to install first line of NCP was taken in 1991 and the
second line in 1997. The first line commenced operations in 1997 and the second
line became operational in 2003. Same is the case with project implementation of
Askari pharmaceuticals the project was commissioned with a delay of
approximately two years. The delay in project implementation caused huge cost
overruns of billions of rupees to AWT and at current level of capitalization and
financial burden, profitability seems a remote chance. Though there was a
feasibility prepared for Askari pharmaceutical project, we have seen no evidence
that the feasibility was supported by a professional market study and the study
was quite basic. The project was designed to produce the entire demand of
Paracetamol, Aspirin, methyl Salicylate, sodium Salicylate and salicylic acid in
Pakistan. At present the back end of the pharmaceutical project is not viable to
operate due to competition and primitive technology. A recent visible example of
gaps in decision-making process is in the case of CNG project. The project was
approved without any feasibility or market study. The project has landed in all
sorts of problems and contract with railways to acquire land for setting up CNG
Management of Technical Organizations & Practices
26 ARMY WELFARE TRUST – A CASE STUDY
stations has backfired and no CNG station on railways sites could be setup till the
writing of this plan. Strains of ill planning and delays in project implementation
can also be traced in the case of CNG project. Complete equipment for 25 CNG
stations was ordered, paid for and received without clearing any of the sites. Only
one CNG station is operational at present and AWT is left with sustaining huge
financial burden in the shape of financial costs on the cost of imported machinery.
Financial Authorities/ Limits
Expenditure above Rs. 500,000 requires approval of Managing Director.
In case of donations and entertainment/ business promotion expenditure, the
threshold is Rs. 20,000 and Rs. 10,000 respectively. All Directors have the power
to approve any budgeted expenditure up to Rs. 500,000 with the concurrence of
Director Finance. They are also allowed to make cash payments of a routine
nature of up to Rs. 1,000 after checking/verification by the respective Finance
Managers. All transfer of funds within AWT and between projects is managed by
the Director Finance.
Director Industries can approve any kind of expenditure up to Rs. 500,000
if it is within budget upon recommendation of the Director Project or the
committee formed for this purpose. Director Project (DP)-Nizampur Cement
Project (NCP) can approve the capital and revenue expenditure up to Rs. 100,000,
payment of utility bills, indents within budgets, other expenses at factory,
donations up to Rs. 10,000 and entertainment/ business promotions expenses up
to Rs. 5,000. GM (F) can sanction limited amounts of expenses upon
recommendation of DP. GM (Works) can approve limited amounts of expenses
upon recommendation of the head. It is apparent that the MD is overburdened
with routine approvals of release of funds and the Directors are involved in
approvals of routine financial matters. The budgeting exercise is undermined as
expenditures approved in the budget have to be re-approved and release of funds
also requires approvals.
Management of Technical Organizations & Practices
27 ARMY WELFARE TRUST – A CASE STUDY
2.1.5 HRM
The recruitment and selection procedures at AWT are not based on pure
merit, although the policy states that the basic requirement is competence. The
prospective candidates for formal employment have been divided into two
segments or categories namely Ex-Army / Navy/ Air force officers, and civilians
but army officers enjoy absolute preference. Furthermore, for armed forces
personnel the requirements for a post are based on the last position (rank) held in
the army. Ex Service Officers and civilians are employed only when Ex-Army
Officers are not available. There is a provision to recruit Officers on Special Duty
(OSDs) as and when required. No formal process is used to identify HR needs in
relation to corporate, strategic or operational planning in AWT Head Office and
projects (excluding corporate entities). Human resource management appears to
become active only when required. Whatever exists is in the embryonic stage and
stems purely from operational demands. The organization does not document
knowledge and skills required for key posts, and recruitment is not done on skill-
competency matching.
There is no formal system for training and development. Training needs
are not assessed, nor are there any methods for developing or updating any
training plans. Limited training is done when new systems are adopted or new
machinery introduced, and those implementing the changes are expected to orient
staff to the new change or, at minimum, to leave instructions for dealing with the
change. Training is mainly tied to proficiency on the job. The staff of AWT does
not perceive training and development as essential to their work or tenure. There
is no increase in employee capability and potential. Training serves to retain
employees longer, as they see their personal and managerial development as a
beneficial factor. Also in-house training programs are an effective method for
providing employees non-monetary rewards
There is no system in place for interim performance measurement in the
AWT Head Office. There is little awareness for the need of performance review
Management of Technical Organizations & Practices
28 ARMY WELFARE TRUST – A CASE STUDY
and realignment. Goals are not reviewed during the period, to ensure that
direction and deadline schedules are met. There is no formal process to manage
work load and there is little awareness of the need for it. Deadlines are more
common than work schedules. Routine jobs, strict guidelines for completing
work, and unmanaged workload not only adversely affects the quality of output
but also prevents emphasis on training or developing the work force. Performance
management system in place is inherently flawed, and does not reflect the true
performance of an employee. The goals and tasks are not defined and agreed with
respect to Management performance measures. There is no provision for
evaluating various managerial and functional competencies. There is a major
communication gap between the Management and staff. Communication is
usually downwards and one way rather being mutual. Furthermore, motivation of
employees is low, due to absence of formal career planning and link of
performance with compensation, both at AWT Head Office and projects. The
corporate entities performing satisfactorily do have formal performance
management systems.
The most important purpose of performance appraisal is to ensure that
organizational goals and strategic objectives for the period are achieved which
will not be realized, if the performance appraisal system is unsatisfactory. If good
performers are not encouraged and unsatisfactory performers are not brought to
the fore a deep rooted trend for incompetence continues.
There is no career progression for the army personnel because they are
hired on a fixed term basis. This adversely affects the staff morale and motivation
and dampens performance. No need is felt for development of employees. Staff
training is limited to occasional training courses conducted by Askari Commercial
Enterprise, which currently was limited utility for the organization.
Service Rules/ SOPs operative at AWT Head Office dates back to 1984
and since then, the document has not been properly updated. There have been
periodic ad hoc additions and amendments without corresponding revisions in the
Management of Technical Organizations & Practices
29 ARMY WELFARE TRUST – A CASE STUDY
document. Therefore, the polices lack consistency and coherence. There is an
urgent need for brining the policies and rules in accordance with the demands of
modern management, and replicate the practices and systems of organizations
with accepted HR practices. Human capital represents the greatest single cost and
investment for most organizations. The workforce is diverse and requires
planning which is currently non-existent. Therefore, recruitment, manning, re-
designations, termination, performance management, appraisal and review,
training and development, reward and recognition, promotion, employee relations
and the culture are not in conformity with best practices.
Compensation is not in line with prevalent market trends and no effort is
made to correct it. Consequently this affects the quality of employees recruited,
and also leads to high turnover. The reward system in AWT is only through
promotion, and for only a selected section of the workforce. The latter will not
motivate individuals who can see no future. Staff turnover is an issue and
recruitment of suitable personnel is also a problem.
Retaining staff at Head Office is problematic and staff turnover is
officially stated at 5-10%. The latter exists because rewards are neither internally
equitable, nor externally competitive. Consequently good talent is difficult to
retain in the organization. It is widely acknowledged that cash benefits are
effective motivators of employee performance. The monetary reward system for
recognizing good performance does not exist in spirit. Rewards distributed do not
serve the purpose of urging other employees to improve performance, and may
even disgruntle them. In short the retention problem existing in AWT can largely
be attributed to non-competitive compensation, career progression and
performance management system.
2.1.6 Internal Audit
The Internal Audit (IA) Department is a part of AWT Secretariat
consisting of 11 personnel including GM. Three types of Internal Audits are
performed, namely Post payment, Prepayment and Special Audit. IA of AWT
Management of Technical Organizations & Practices
30 ARMY WELFARE TRUST – A CASE STUDY
projects is carried out on annual basis but it is delayed due to limited staff. Apart
from ACBL, ALL and AGICO, which have their own IA setup, the Head Office
IA Department is responsible of internal audit of all AWT BUs. All payments
above Rs. 100,000 are required to be pre audited. Special audits are executed
under the directions of the relevant authority.
Audit teams are selected according to the volume of work at the projects.
Normally a team of two to three members is allocated for the project. For audit of
major projects, the team is headed by GM (IA), whereas for other projects, a
Finance Officer conducts the audit. The IA reports are finalized at Head Office,
with prior discussion with the concerned project heads, and submitted to the MD,
AWT. Projects on receipt of IA report forward their replies to their respective
Directors with a copy to GM (IA), who analyzes the replies and give comments
on the replies received.
AWT does not have an internal audit manual. Audit programs are not
prepared for each internal audit exercise. The internal audit Department is
understaffed as there are a number of projects to be audited during the year and
therefore some projects are audited in alternate years. In addition, the internal
audit function is focused on the financial aspects of the procedures and controls
only, and does not have resources and technical competencies to broaden the
horizon and scope of IA. E.g. risk analysis, system improvements and redesign.
2.1.7 Management Information System
In 1996, it was decided that the primary functions at AWT Head Office
should be computerized. In the same year a Computer Section was established to
achieve this objective under the Technical Division. The tasks of the Computer
Section are to develop systems for relevant Divisions and Departments,
maintenance of computer hardware at AWT Head Office and conduction of
training courses for both Management and staff. After the establishment of
computer section various software were developed for different Divisions and
Departments. Recently the computer section was working on the development of
Management of Technical Organizations & Practices
31 ARMY WELFARE TRUST – A CASE STUDY
an ERP solution for Army Welfare Woolen Mills. The Computer section used
"Informix New Era" for the development of software's till 2000, but now Oracle is
being used. Oracle and antivirus program Norton' are not licensed.
Computer section's role is limited to the preparation of software based on
the requirements of the Divisions. Responsibility of data feeding and report
generation rests with the relevant Divisions/Sections. Based on our discussions
and interviews with key Management personnel, the utilization of the available
software is very low and there is a need to build awareness among Senior
Management regarding the usefulness and benefits that can be gained by using the
available software. Furthermore, the Management attendance in the computer
training programs conducted by the computer section has been poor and needs to
improve so that a basic competency level is achieved across the board. Little
efforts have been made to establish an exception reporting system for the AWT
Management. The primary reason behind this is the apprehension of a
computerized environment and lack of communication and understanding
between the MIS users, implementers and system developers.
Due to lack of Management attention towards data upgrade, reports
generated are not considered to be relevant in decision-making and much reliance
is based on manual reports. Other problems faced by AWT are IT illiteracy and
the absence of initiative regarding implementation of computerized data
processing systems. In the absence of a comprehensive MIS the decision-making
process at AWT is based on un- substantiated data, the risk of errors and
omissions are high, and the data available in most cases is not up to date. There is
also a need to develop a complete MIS manual as the computer section is using
SOPs, prepared for the Technical Division which is not suitable for the functions
performed by the computer section. However, for existing and end users,
procedures are prepared by computer section in black and white. The documented
contingency planning for the recovery of data is not sufficient and should be more
comprehensive regarding loss of software and hardware. There is also need to
maintain a record of problems faced by AWT regarding hardware and software.
Management of Technical Organizations & Practices
32 ARMY WELFARE TRUST – A CASE STUDY
2.2 MANAGEMENT AUDIT TOOLS
For assessing the processes and efficiency of any organization different management
related tools can be used but we have implemented the most commonly used SWOT analysis and
the Balanced Score Card (BSC) which gives the clear picture of the processes and the systems
incorporated in AWT groups of companies. AWT is a unique Trust with multi flavored
businesses starting from shoe making up till Oil & Gas sector investment in its portfolio.
2.1.1 SWOT ANALYSIS
Taking into account the objectives spelt out above, we conducted a
situational analysis, in order to identify sectors (both existing and new) that could
potentially be a strategic fit between external opportunities and internal strengths
of AWT, while working around external threats and internal weaknesses. Based
on the analysis we assessed the “strategic fit” of various sectors that were
discussed subsequently. As a first step a corporate SWOT matrix was developed
and discussed and is being depicted hereunder:
Management of Technical Organizations & Practices
33 ARMY WELFARE TRUST – A CASE STUDY
SWOT ANALYSIS CHART
Strengths Weakness1. Brand name “Askari”. 2. Trust of public.3. One of the largest agro land holdings in
Pakistan4. Well rounded financial sector presence*5. Aviation charter business 6. Prime pieces of land7. Relationship with GoP
1. Marketing2. Human resource quality3. Lack of readily available equity capital4. Failure to outsource5. Ownership structure6. Late entry into sectors (follower mentality)7. Inability to exit from un-attractive
businesses/sectors8. Capital Structure (high gearing)9. Heavy reliance on the performance of
cement industry & Aviation charter business
10. Lack of ability to compete in competitive environments
11. Under-performing projects12. Lack of extraction of synergies amongst
business units13. Discontinuity in Management & policies14. Lack of specialists to head BUs 15. Skewed and unbalanced portfolio16. Delay in execution of plans / slow decision
making
Opportunities Threats1. Window of opportunity till 2013 when
external debt repayments begin2. Presence in downstream O&G sector
coupled by ever increasing demand in energy requirements (gas, oil, LNG)
3. Diversification into agro based industries (entry into dairy business etc)
4. Growing financial sector5. Supply demand gap in the power sector6. Real Estate Sector7. Renewable energy
1. Slow speed of implementation of our Projects
2. Major loan repayments after 20133. Minimum Capital requirement in the
banking sector4. Reduction in cement sector earnings &
competition in aviation business5. Impairment of assets in Cement and
Pharmacy.6. Potential shortage in the gas system post
20107. Potential competition in the charter
business 8. Political Position- post election 2007
Management of Technical Organizations & Practices
34 ARMY WELFARE TRUST – A CASE STUDY
2.2.1.1 STRENGHTS
2.2.1.4.1 Brand Ambassador . The brand name ‘Askari’ is in itself
strength of the group. The name in its self a symbol of the
trustworthiness and the reliability. All the customers and
the businesses know that this name will work for the
prestige of his name and it will not run away from any of
the businesses.
2.2.1.4.2 Favourable Public Opinion . The brand name and the
companies of the AWT succeeded in wining the trust of the
general and the business community due to the reason that
every body knows that the most powerful institution Army
is at the back of the trust. People are more comfortable to
invest and to buy the products. Here important point is that
they were unable to fully utilize this power of the name.
2.2.1.4.3 Charter Business in Aviation . Aviation charter business is
progressing in success because of the fact that it is some
what monopolized in the scenario being the only customer
“Armed Forces” and the only service provider AWT due
to security and other service constraints.
2.2.1.4.4 Availability of Precious Land .The strategic assets of the
AWT group are the land which is located on the prime
location of the major cities as in Karachi and Faisalabad.
These land are the can be used very effectively and very
efficiently, but this strength should have been used before.
2.2.1.4.5 Strength in Relationship . This is the unique strength in
the sense that can’t be attained by any firm. You can have
good relations with some government at one time but with
the change of government the affairs may change totally,
Management of Technical Organizations & Practices
35 ARMY WELFARE TRUST – A CASE STUDY
but in case of AWT the relations are not on person based
but as affirm based. This is the important factor while you
are doing a business in the country.
2.2.1.2 WEAKNESSES
2.2.1.4.1 Faulty Outsourcing Technique . The important problem
was the failure of the group to incorporate the outsource
and the unavailability of the internal resources in many
fields as an experts. The authorities were reluctant to seek
help for the expert opinion. This created severe problems in
many areas. The group was also unable to employ the
appropriate manpower at appropriate place.
2.2.1.4.2 Lack of Decision Making Power . Power of decision
making was soar point and the main hurdle which kept the
portfolio of the AWT in the loss. Many businesses were
doing loss but they were unable to quit from those
businesses. The example was ‘Ask pure’, they were unable
to compete with the international organizations like Nestle
and others and at the same time it was not taking the ratio
from the market. The decision to quit which they took year
before was to be taken early to keep the business alive.
2.2.1.4.3 Rapid Changes in Top Leadership . Managing Director
MD use to be changed after 3 years. It was also the soar
point and the hurdle in the success of the AWT as
whenever policies from the new command use to go in
implementation phase the command use to change and start
waiting for the new policies to come.
2.2.1.4.4 Technique of Marketing/Franchising . Marketing is
fundamental to any businesses growth. The marketing
Management of Technical Organizations & Practices
36 ARMY WELFARE TRUST – A CASE STUDY
teams (Marketers) have the task to create the consumer
awareness of the products/services through marketing
techniques; unless it pays due attention to its
products/services and consumers' demographics and
desires, a business will not usually prosper long-term.
Marketing is the backbone of the success of the company
because it forces the mind of the users to buy the product
offered by the company. Marketing is always been the
weakest part of the products of the AWT group of
companies. The clear example of this fact is that most of
the buyer and the customer do not know about many
products of AWT as mineral water, pharmaceutical and
many others as the same above.
2.2.1.4.5 Quality of Human Resource Quality . Modern analysis
emphasizes that human beings are not "commodities" or
"resources", but are creative and social beings that make
class contributions beyond 'labor' to a society and to
civilization. The human mind is the fundamental resource
for the success of the company. The second weakness of
the AWT was that they were unable to retain the skilled
manpower of the companies. The custom which was in
practice was that every skilled worker used to stay in the
place not more than for 2 – 3 years. Earlier the aim of the
organization was misunderstood in the sense that it’s an
organization for the welfare of the armed forces more than
a profit earning business, the welfare meaning was to give
jobs to the Army retired personnel. This created a problem
when the group started facing the problem in the shortage
of the skilled workers.
‘Businessman can’t fire similarly firer can’t run business’
Management of Technical Organizations & Practices
37 ARMY WELFARE TRUST – A CASE STUDY
‘Jack of all Trade Is Usually Master Of None’
2.2.1.4.6 Lack of Initiative . Lack of initiative in setting up new
businesses was the all time problem for the group. That
who enters first any business takes away all the benefits of
the new idea. But here in this group the problem of the late
entry as a Follower created problem for the business. The
main example of this was the entry in the cement industry
when the boom period was over and now the business
started declining. Land was also the same, when the boom
period got over they started to sell out their land.
2.2.1.4.7 Unbalanced Portfolio . Portfolio of the group if we see in
detail is very unbalanced in the sense that 70% of the total
investment of the group is in Cement Industry. If the
cement industry of the country is in loss the whole portfolio
of the group goes in negative.
2.2.1.3 OPPORTUNITIES . The debt and the loan which the group has taken
from the external resources are to be paid back till the year 2013 so this
time of few years are available for the group to make use of this big
amount to invest in some profit oriented businesses. This is the major
opportunity which the group can avail. The increasing demand of the
Power sector is also the opportunity for the group to avail as in this sector
the investor has the security of his investment from the government side.
AWT has started to step in the Power sector. The increasing demand in the
alternative energy Renewable Energy is also the opportunity for this
group as this group is very rich in land that may be made available for the
production of the alternative energy like Bio diesel which is blend of the
pure diesel with oil extracted by the seeds of the Jatropha Plant, RSD
residual derived fuel and many other. Real estate is also the opportunity
for the AWT group.
Management of Technical Organizations & Practices
38 ARMY WELFARE TRUST – A CASE STUDY
2.2.1.4 THREATS
2.2.1.4.1 Major Loan Repayment . There are two types of the loan
which AWT group has acquired from different sources,
resources under the State Bank of Pakistan and the
resources which does not come under the state Bank of
Pakistan. The loans which are other than State Bank of
Pakistan are known as internal loans and the other loans are
termed as external loan. Internal loans are from the W & R
Directorate of Army. The main threat fro the group is the
repayment of the major loan to external resources which
includes other bank’s loan. This is the major threat for the
group as the time is very near when the repayment will start
that is year 2013.
2.2.1.4.2 Cement Industry . The other threat for the group is the
unbalanced portfolio which we have discussed in the
weaknesses also. Now the other perspective is that 70% is
in the cement industry if the cement industry goes in loss
then the overall balance sheet of the group will give loss
statement. The reason for this is the simple rule of the
supply and the demand of the market. The normal demand
of the market is 22 million ton but the supply is now a days
round about 30 million ton. So the demand is less than the
supply so this is also the threat to the group.
2.2.1.4.3 Post 2010 Scenario . Group has stepped in the Oil & Gas
industry by opening CNG stations which is also
contributing a lot in the profit of the group, but the situation
of the gas in Pakistan is that there will be a shortage of Gas
after 2010. If Pakistan fails to do a deal with Iran for gas
pipeline then this threat will increase in its intensity.
Management of Technical Organizations & Practices
39 ARMY WELFARE TRUST – A CASE STUDY
2.2.1.4.4 Askari Aviation . The business of the Askari Aviation is in
itself in threat as at this time the business of the charter
business is some what monopolized with Pakistan Army. If
any other party come and give some good proposals to
army and ask to come in open competition, it may cause
create problem for the group.
2.2.1.4.5 Political Condition . The political condition of Pakistan is a
severe threat to any business in Pakistan. In case of AWT
group they are coming in joint venture with Arif Habib
Group and one international firm in Karachi for the
construction of the high storied Towers. After the political
condition that changed after the death of the Benazir Bhutto
has given a very bad sense of business.
Management of Technical Organizations & Practices
40 ARMY WELFARE TRUST – A CASE STUDY
BALANCED SCORE CARD
Table 3.2
The Financial Perspective represents the long term strategic objectives of the
organization and thus it incorporates the tangible outcomes of the strategy in traditional financial
terms. The objective of cash flow is achieved through the circulation of surplus cash to pay
internal liabilities not the external liabilities which are related to State Bank, the external
liabilities were deferred by State Bank till 2013 because of the restructuring of the entire group.
Rate of interest (ROI) was set to 5% growth till 2010 and further to 10% increase till 2013.
Financial results on yearly basis are compared to set further targets of the company. Return rate
on equity and capital is set to 14% including risk/hurdle rate, and further projects are only taken
if their return rate comes to the decided rate. Strategic assets of real estate are sold to invest in
Management of Technical Organizations & Practices
FINANCIAL PRESPECTIVE
OBJECTIVES ACTIVITIES Key tasks to achieve
results/responsibilities
VERIFYING INDICATORS/INITIATIVES
1.1 Cash Flow
1.2 ROI
1.3 Financial results
1.4 Return on Equity and Capital
1.5 Strategic Assets(Real Estates)
1.6 Joint Ventures
2.1 Surplus cash flow is circulated
2.2 Growth Profitability upto 5%
2.3 2006-500Mn
2.4 11% + 3%(Hurdle/Risk)=14%
2.5 Dead investment Sold
2.6 In existing / new projects, looking for Well Estb /
3.1 Internal liabilities to be paid upto 2013.
3.2 Tgt based incentives for BU's
3.3 Tgt of 5% inc in profits till 2010 and 10% inc further till 2013.
3.4 Projects are taken only if the rate of return reaches 14%.
3.5.1 Investment in power sector.
3.5.2 AWS payments.
3.6 Mobil-Askari joint
41 ARMY WELFARE TRUST – A CASE STUDY
power, oil and gas and paying of welfare schemes loans. Joint ventures with existing/ new
business partners are planned.
INTERNAL BUSINESS PROCESSES
OBJECTIVESACTIVITIES
Key tasks to achieve results/responsibilities
VERIFYING INDICATORS/INITIATIVES
1.1 Smooth, efficient and effective process
1.2 HR induction
1.3 Core teams
1.4 Dash board System
2.1.1 Internal controls streamlined2.2.2 Decentralization 2.2.3 Removal of Bureaucracy2.2.4 Manuals of all Deptts 2.2.5 SOP’s
2.2 Induction of professionals
2.3 Induction/training of core teams to decide Strategic goals.
2.4 Usage of Software to generate daily reports and progress.
2.5 In existing / new projects, looking for Well Estb / Professional Companies.
3.1.1 Streamlining of procedures3.1.2 Financial Analysis3.1.3 Empowering managers
3.2.1 Hiring of Job relevant Professionals
3.3 Highly qualified indls induction with relevant mkt based experience.
3.4 Automation of Deptts
Table 3.3
The Internal Process Perspective is concerned with the processes that create and deliver
the customer value proposition. It focuses on all the activities and key processes required in order
for a company to excel at providing the value expected by the customers both productively and
efficiently. These can include both short-term and long-term objectives as well as incorporating
innovative process development in order to stimulate improvement. The processes were made
smooth and effective by taking measures such as strictness in internal controls, Auditing,
Decentralization and removal of un-necessary bureaucracy, and implementation of SOPs
Management of Technical Organizations & Practices
42 ARMY WELFARE TRUST – A CASE STUDY
according to the developed Manuals. Highly qualified Professionals are hired along with
developing of Core Team which aligns the strategic goals with efforts. Dash board is a Software
based activity in which a daily progress report is generated of each Business units (BU).
The Customer Perspective
OBJECTIVES ACTIVITIES Key tasks to achieve
results/responsibilities
VERIFYING INDICATORS/INITIATIVES
1.5 Customer Profile
1.6 Marketing
1.7 Business to Business deals
1.4 Feedback System
2.1 Customer profile is maintained
to ensure customer satisfaction and retention.
2.2 Invest more in Marketing of the company.
2.3 Investing and concentrating on projects other than direct sales.
2.4 Strong feedback sys to ensure customer satisfaction.
3.1.1 Business given is monitored closely to ensure due attention.
3.1.2 Reporting to MD/COO directly by the customer.
3.2 Spending of around 50 crores in yr 2006-7.
3.3.1 Closing Askari water3.3.2 Invest in O & G, Power
sector.
3.4 Direct reporting to MD/COO of AWT.
Table 3.4
The Customer Perspective defines the value proposition that the organization will apply
in order to satisfy customers and thus generate more sales to the most desired customer groups.
A customer profile is maintained to that the most profitable customer is given desired output;
Marketing is a weakness in the company as and when compared with other counterparts.
Moreover business to business deals are preferred within the group except few units for example
Banks. Alongside other measures feedback system is made effective and a strong one in order to
ensure operational excellence and service.
Management of Technical Organizations & Practices
43 ARMY WELFARE TRUST – A CASE STUDY
LEARNING AND GROWTH
OBJECTIVES ACTIVITIES Key tasks to achieve
results/responsibilities
VERIFYING INDICATORS/INITIATIVES
1.8 Training
1.9 HR assessment
1.10 Employee turnover
1.11 Internal Promotions
1.5 Gender/Racial ratios
2.1 Outdoor courses offered to
enhance skills.
2.2 Overall and performance based tgts are assigned at all Levels
2.3.1 Employee satisfaction was given preference
2.3.2 Retention of Professionals
2.4 Internal promotions were given as reward to ensure competitions.
2.5 Equal treatment to all
2.6 In existing / new projects, looking for Well Estb / Professional Companies.
3.1 Coord with local and foreign universities for professional Cert.
3.2.1 Rewards3.2.2 Bonuses(overall and
performance based)
3.3 Packages and perks were given in line with the Mkt.
3.4 Bonuses/rewards to indls achieving Tgts.
3.5 Jobs were not specific to gender/ race.
Table 3.5
The Learning and Growth Perspective is the foundation of any strategy and focuses on
the intangible assets of an organization, mainly on internal skills and capabilities that are
required to support the value-creating internal processes. To impart professional training and
improving skills of workers certification courses are offered in both local and foreign and
universities. Human Resource is then further assessed to check overall performance of the indls.
Employee turnover is reduced through retention of Professionals by giving market based
incentives and perks alongside internal promotions. Gender/race is not specific to any job or
appointment in the company.
Management of Technical Organizations & Practices
44 ARMY WELFARE TRUST – A CASE STUDY
2.2.1.5 Comparison of Benefits . Our main aim was to collect the data
from different companies for the comparison of the different benefits
availed in other companies and give you a brief comparison about these
benefits that are available in Army Welfare Trust group of companies. The
main data collected from the group was emphasized on Askari Bank. It
was very difficult for us to collect such a detailed data of different
companies but we are thankful to Mr. Sabir Mumtaz of Askari Bank HR
department who helped us a lot in this study. We collected data from 20
different companies and compared with AWT to have a clear picture of
the benefits comparison. The most popular benefits extended amongst the
data sample include loans, life & disability insurance, medical plan,
company car, housing assistance, variable pay, recognition awards and
assistance for professional development. Assistance for children's
education, telephones and leave travel benefit, however, are the least
prevalent. Company cars, housing in kind, club membership etc. are
typically limited to higher grades, while loans, medical plans, insurance,
recognition awards, professional development etc. are typically provided
to all employees in the organization.
Management of Technical Organizations & Practices
45 ARMY WELFARE TRUST – A CASE STUDY
Figure 4.1Table 4
Policy Details & Market Trends Askari's Positioning
Housing Loan In line with the mkt.
Provision &Eligibility
Entitlement
Interest Rate
All organizations, except two, extend Housing Loans
to their employees in all grades, subject to completion
of minimum service period.
The quantum of loan typically varies by grade as is
seen in 7 organizations. The data sample is split
between providing it as a fixed monetary entitlement
and linking it to the salary of the incumbent. However,
the amount linked to salary is also typically capped by
a fixed monetary amount. In case of fixed monetary
limits, the entitlement ranges from PKR 1 Mln - 10
Mln across grades and 60 - 100 times monthly basic/
gross salary. Some organizations also specify Debt
service norms as a measure of loan entitlement.
The organizations in the data sample charge nominal
rates of interest so as to maximize the benefit
extended to the employee. The median rate of interest
is 3%. A few organizations charge interest rates
ranging from 1% - 2%. One organization charges
interest equal to the Treasury Bill Rate + 1% p.a. with
a floor of 4.3% p.a. One organization does not charge
any interest from its employees.
In line with the mkt
.In line with the mkt.
In line with the mkt.
Variable Pay: Behind
Provision &Eligibility
18 organizations in the data sample have a variable
pay plan in place. Most organizations with a variable
pay program provide it to all employees subject to
Behind
Management of Technical Organizations & Practices
46 ARMY WELFARE TRUST – A CASE STUDY
their performance. Two organizations have a plan for
Junior Management and above only. One organization
provides variable pay only to the top performers in
any department. Majority of organizations extend this
benefit basis the organizational, functional and/ or the
individual performance.
Car Loan Marginally Behind
Provision &Eligibility
Entitlement
Interest Rate
All organizations, except two, extend Car Loans to
their employees subject to completion of minimum
service period. A majority of the organizations
provide this loan to all employees, while a number of
other organizations that provide a car to Middle and
Senior management employees; do not extend a car
loan to them. Two organizations extend this loan only
to local employees.
Almost an equal number of organizations differentiate
the car loan entitlement by grade, and an equal
number specify this amount uniformly across levels.
The quantum of loan is typically specified either in
terms of a definite monetary limit, ranging from PKR
125k to PKR 7.5 Mln across grades or linked to car
value (80% - 90% of car value). However, a unique
practice in this regard is a differentiation between new
and second - hand cars made by 2 organizations.
Some organizations link the entitlement amount to
salary as 50% of net salary and 30 times monthly
basic salary, respectively.
Interest rates typically range from 3% - 5%. 2
organizations charge interest rates of 1% and 2%,
Provision: In line with the mkt.
Eligibility: Behind
In line with the mkt
Management of Technical Organizations & Practices
47 ARMY WELFARE TRUST – A CASE STUDY
while one organization extends interest free car loan
to its employees. 2 organizations differentiate the
interest rate charged by grade, where for one
organization the Supervisory staff and Junior
management are charged 4% and for the higher levels
it is 5%; the other organization charges no interest rate
from the Supervisory staff but charges a rate of 5%
from the Junior management. One organization
charges interest equal to the Treasury Bill Rate + 1%
p.a. One organization differentiates interest rate based
on the loan amount, wherein it charges 6% for loan
amount up to PKR 500k and 8% for loan amount
greater than PKR 500k
Marginally Behind
Other Loan Marginally Behind
Provision &Eligibility
Entitlement
All organizations, except two, extend loans other than
Housing and Car Loan to their employees.
Organizations typically provide a miscellaneous loan
to their employees. All of the organizations providing
this benefit extend miscellaneous types of loans to all
employees. One organization extends investment loan
plan to only Higher levels in Junior management -
Lower levels in Senior management. Minimum
service period for eligibility extends from 3 months to
2 years.
9 organizations specify entitlement amounts to be 3
times monthly gross salary; whereas 4 organizations
specify it to be 3 times monthly basic salary. Only one
organization differentiates the loan entitlements across
grades. Some organizations specify a fixed entitlement
amount of PKR 50k (Computer Loan). Only 2
In line with the mkt.
Marginally Behind
Management of Technical Organizations & Practices
48 ARMY WELFARE TRUST – A CASE STUDY
Interest Rate
organizations provide more than one kind of loan for
their employees.
While 5 organizations charge interest rates ranging
from 2% to 3%, 8 other organizations charge rates
ranging from 4% to 5%. 3 organizations do not charge
any interest from their employees. For one
organization in the data sample, interest rates vary
depending on the type of loan extended. One
organization charges interest equal to the Treasury
Bill Rate + 1% p.a. One other organization charges a
high interest rate of 8%.
Marginally Behind
Bank Provided Car
In line with the Mkt.
Provision &Eligibility
Entitlement
All organizations in our sample extend this benefit to
their employees, typically at the Middle Management
levels and above. Lower levels in the organizations
are usually extended a Car Loan instead. 80% of these
organizations purchase the cars outright, while the
remaining organizations lease finance cars.
95% of the organizations in our data sample typically
specify car models along with cubic capacity limits
for eligible employees. The typical car models are
Suzuki Cultus 1000 cc, Suzuki Baleno 1300 cc,
Honda City 1300 cc, Honda Civic 1500/1600 cc,
Toyota Corolla 1300/1500/1600 cc and Honda Accord
1800 cc across different levels. A few organizations
also specify a fixed monetary limit with the specified
car model.
65% of the organizations provide two cars to its
In line with the mkt.
In line with the mkt.
Management of Technical Organizations & Practices
49 ARMY WELFARE TRUST – A CASE STUDY
Fuel Entitlement
Maintenance costs
Chauffeur
employees in Senior Management and above.
All organizations specify fuel entitlement for
employees differentiated across grades. The
entitlement for fuel range for different levels is as:-
Supervisory Staff: 50 litres per month (one
organization only)
Junior Management: between 50 - 250 litres
Middle Management: between 75 - 350 litres
Senior Management: between 150 - 500 litres
Top Management: 275 - 650 litres.
In 3 organizations, fuel expenses for Top Management
are covered on actual. One organization does not
provide fuel.
Maintenance costs are typically reimbursed to
employees who are provided with Company cars and
the amount of assistance is typically based on actual
costs incurred. A few organizations, however, specify
monetary limits for the same ranging from PKR 12k -
120k per annum across grades. 55% of the
organizations cover maintenance expenses for Senior
Management and above on actual. One organization
provides maintenance costs as 20% of car value over 5
yrs. 2 organizations do not cover maintenance
expenses.
70% of the organizations provide a chauffeur,
typically to senior level employees. In some cases Top
levels get 2 chauffeurs and are either provided an
allowance or are reimbursed for the same.
In line with the mkt.
Unable To Access
Behind
Bank In Line with the Mkt.
Management of Technical Organizations & Practices
50 ARMY WELFARE TRUST – A CASE STUDY
Accommodation
Provision &Eligibility
Entitlement
Utilities
Allowance
17 organizations provide Housing Assistance in some
form to their employees. Majority of the organizations
in the sample providing Housing Assistance extend it
in Cash to their employees. 24% of the organizations
extend this benefit in both cash and kind.
In 70% of the organizations providing this benefit the
entitlement is linked to annual basic salary, with the
linkage ranging from 30% - 45% of annual basic
salary. For one organization, the HRA amount is not
fixed and is dependent on city, location etc.
A majority of organizations specify the utility
allowance to be 10% of monthly basic salary. 2
organizations also specify fixed monetary entitlements
for utilities ranging from PKR 10k - PKR 16k per
month. One organization covers utilities expenses for
select employees in Senior management and Branch
Head on actual.
In line with the mkt.
In line with the mkt.
In line with the mkt.
Medical (Hospitalization)
Behind
Provision &Eligibility
All the organizations in the data sample extend this
benefit to their employees at all levels. While 12
organizations have insurance scheme for providing
hospitalization coverage, 8 organizations have
internally funded schemes for hospitalization benefits.
All organizations extend this benefit to all their
employees. All organizations cover employee, spouse
and dependant children under this policy.
Most organizations specify a fixed monetary
In line with the mkt.
Management of Technical Organizations & Practices
51 ARMY WELFARE TRUST – A CASE STUDY
Entitlement
Maternity Benefit
entitlement per ailment or per person that will be
borne at each level, as per the insurance policy. The
entitlements range from PKR 15k - 600k per person
across grades or on actual. 3 organizations link the
entitlement amount to the employee's salary, with 2 of
them specifying it as 3 time’s monthly basic salary per
annum and 48% of annual basic salary, respectively.
95% of the organizations in the comparator provide
maternity benefits to their employees, typically
covering normal/cesarean deliveries. One organization
does not provide the benefit and only extends 60 days
Maternity Leave. A majority of organizations cover
all employees uniformly across levels; about 10% of
the organizations differentiate the benefit entitlement
by grade. 8 organizations do not specify a limit on the
number of cases for which the benefit is provided,
while other organizations restrict the coverage to 2 or
3 pregnancies only. One organization differentiates
number of cases covered basis employee grade.
Marginally ahead
Behind
Medical Plan
Provision &Eligibility
Entitlement
85% of the organizations in the data sample provide
medical clinical benefits to their employees at all
levels. One of these organizations only covers for
chronic cases. All organizations extend the benefit as
an internally funded scheme.
59% of the organizations providing the benefit specify
a fixed monetary entitlement differentiated by marital
status of the employee. This amount may be uniform
or differentiated across grades and ranges from PKR
1.2k - 130k across grades. 3 organizations link the
In line with the mkt.
In line with the mkt
Management of Technical Organizations & Practices
52 ARMY WELFARE TRUST – A CASE STUDY
entitlement amount to the employee's salary, ranging
from 8.5% - 10% of basic salary. Some organizations
also cover these expenses on actual either for all
employees or for their senior employees.
Insurance In Line with the Mkt
Provision &Eligibility
Sum Assured:
Natural &
Accidental Death
Sum Assured:
Permanent Partial
& Temporary
Total Disability
All the organizations in the data sample extend this
benefit to their employees in order to cover them for
death due to natural causes and accidental death. A
majority of the organizations also insure employees
for permanent total disablement, permanent partial
disablement and temporary total disablement.
6 organizations differentiate the sum assured by grade,
and specify it as a fixed monetary limit, ranging from
PKR 300k - 10 Mln. The organizations specifying
uniform payouts, largely link the sum assured to
salary, ranging from 2 - 4 times annual gross salary,
and 24- 46 times annual basic salary; PKR 225k- PKR
10 Mln across grades. Typically, the sum assured in
case of Accidental Death is either equal to or double
the sum assured in case of Natural Death.
Organizations differentiating the sum assured by
grade specify it as a fixed monetary limit, ranging
from PKR 500k - 5 Mln. The organizations specifying
uniform payouts, largely link the sum assured to
salary, ranging from 3 - 48 times gross salary. Only 3
organizations specify a uniform sum assured ranging
from PKR 500k -1 Mln across all grades. Typically,
the sum assured in case of accidental death is either
equal to or double the sum assured in case of Natural
In line with the mkt.
Marginally Ahead
Unable to assess
Management of Technical Organizations & Practices
53 ARMY WELFARE TRUST – A CASE STUDY
Premium
Contribution
Death.
A majority of the organizations in our data sample
bear 100% of the premium for providing the benefit. 2
organizations contribute 50% and 80%, respectively.
One organization specifies premium contribution for
employee based upon their salary range.In line with the mkt.
Vacation Travel Assistance
Ahead
Provision &Eligibility
Entitlement
45% of the organizations in the data sample extend the
benefit of Leave Travel Assistance to their employees.
The benefit in most cases is restricted to relocated
employees. 3 organizations specify entitlement basis
employee grade. One organization extends this benefit
to Supervisory Staff & below; whereas on the other
and, another organization extends this benefit to
Higher Levels in Middle Management & above.
66% of the organizations extending the benefit link
the entitlements amounts to employee salary. These
amounts range vary across the comparators. One
organization specifies fixed monetary entitlements
differentiated by grades, along with provision of air
tickets for Higher Levels in Sr. Mgt. and above
employees. 2 other organizations provide air and rail
tickets differentiated across grades.
Ahead
Marginally Ahead
Telephone Marginally Ahead
Provision &Eligibility
Telephones at residence are not a popular benefit
among the organizations in the data sample. Only 6
organizations provide this benefit to their employees.
All the organizations providing this benefit extend it
to specific grades. While only 2 organizations cover
Provision: Ahead
Entitlement: In line with the mkt.
Management of Technical Organizations & Practices
54 ARMY WELFARE TRUST – A CASE STUDY
Provision: Mobile Phone
installation charges, a majority of the organizations
cover monthly rental and call charges either on actuals
or in terms of fixed monetary limits.
Mobile phones are comparatively a more popular
benefit. 80% of the organizations in the comparator
extend this benefit to their employees. Organizations
typically provide mobile phones to their employees on
the basis of business need or cover their senior level
employees/business unit heads. 2 organizations extend
this benefit to Higher levels in Junior Management
and above and another to their sales team on a need
basis. A majority of the organizations providing
mobile phones to their employees cover monthly calls,
activation charges, monthly rental charges and the
cost of the instrument. All the expenses are typically
borne on actual.
Eligibility: In line with the mkt.
Entitlement: Unable to assess
Children Education
Provision &Eligibility
Entitlement
Only 6 organizations in our data sample extend this
benefit to their employees to help them meet
educational needs like tuition fees, cost of books,
transportation costs & other course related expenses.
The eligibility for this benefit is varied across the
comparator sample and no definite trend can be
derived.
Most of these (66%) organizations specify the
education entitlement in fixed monetary terms. The
limits, however, vary across these organizations. One
organization covers this expense for Senior
Management and above employees on actual. One
In line with the mkt
Not Applicable
Management of Technical Organizations & Practices
55 ARMY WELFARE TRUST – A CASE STUDY
organization extends this benefit on to employees that
have been relocated. This organization provides
benefit which equals the sum of actual expense in the
new city and the loss of fee paid in the old city.
Club Membership
In Line with the Mkt.
Provision &Eligibility
Entitlement
Club membership is a popular benefit as a majority of
the organizations (75%) in our data sample extend this
benefit typically to their Middle Management
employees and above. This benefit is typically
provided to employees at Senior and/or Middle
Management levels, as the need for business
entertainment is felt more at these levels. In most
organizations, the coverage extends to employee's
family.
Most of the organizations in the comparator provide
Corporate Membership to one club, while some
extend this benefit differentiated by employee grade.
Higher grades get membership to more than one club.
One organization extends membership to 3 clubs for
Top Management.
In line with the mkt.
In line with the mkt.
Stock Option In Line with the Mkt.
Provision &Eligibility
Only 8 organizations out of 20 provide stock options
to their employees. Organizations typically offer stock
based plans to their managerial employees at the
middle and senior levels. The criteria for determining
the award size is quite varied across the data sample.
While some organizations base it on individual
performance, a few other organizations take the
organization's global performance into account as
In line with the mkt.
Management of Technical Organizations & Practices
56 ARMY WELFARE TRUST – A CASE STUDY
well. One organization also lays emphasis on the
employee's potential in deciding the award size.
Time Off Marginally Ahead
Provision of Annual Leave
Entitlement
Provision of Sick
leave
Carry Forward &
Accumulations
Annual leave is provided uniformly to all employees
and the entitlement is typically 30 days. In 2
organizations, however, the number of days for which
an employee is eligible varies, depending on the years
that the employee has been with the organization. One
organization differentiates number of leave across
grades.
Annual leave is typically defined in terms of calendar
days, with only 4 organizations specifying working
days. One organization specifies leave for Supervisory
Staff as calendar days and for Junior Management and
above as working days.
A number of organizations provide from 20 to 30 days
entitlement for sick leave. One organization provides
leave up to 30 days with pay and beyond 30 days
without pay. 2 organizations do not specify a limit for
the same as it is dependent on the Management's
discretion.
13 organizations in the data sample provide for carry
forward of unused leave for all employees. Typically,
carry forward of annual leave is permitted, though
some organizations also allow sick leave to be carried
forward. Organizations allow for accumulation of
leave from 30-90 days. One organization allows for
carry forward up to 360 days Annual leave.
In line with the mkt.
Marginally Behind
In line with the mkt.
Provision: In line with
the mkt.
Maximum Accumulations:
Ahead
Management of Technical Organizations & Practices
57 ARMY WELFARE TRUST – A CASE STUDY
Encashment of
unused leave
Unused leave is typically en cashed on separation.
Most organizations en cash leave on gross salary,
while a few organizations en cash leave on basic
salary. While most organizations allow for
encashment of only annual leave, some organizations
allow for encashment of casual leave as well.
In line with the mkt.
End of Service Benefit
In line with the Mkt.
Gratuity
Pension
Provident Fund
Gratuity benefit is provided by 18 organizations in the
data sample. The entitlement is typically calculated as
a multiple of the monthly basic salary of the
employee, though a few organizations calculate
gratuity payment on the basis of gross salary as well.
Pension is provided by 8 organizations. 3
organizations calculate the benefit on gross salary,
while one organization calculates it on basic salary. In
75% of the organizations providing pension, the
employer contribution to the pension fund is 100%.
All the organizations in the comparator have a
Provident Fund scheme in place for their employees.
In 9 organizations, the employer and employee
contributions are 10% of salary, while 4 organizations
specify it to be 8% - 8.33% of salary. Other
organizations have contributions of 4.5% - 6%.
In line with the mkt.
In line with the mkt.
In line with the mkt.
Recognition Awards
In line with the Mkt.
Provision 15 organizations in the data sample provide various
recognition award schemes to their employees. The
aim of recognition awards is to recognize outstanding
commitment and effort by employees and reward
them for exceptional performance and outstanding
In line with the mkt.Award size: Unable to
assess
Management of Technical Organizations & Practices
58 ARMY WELFARE TRUST – A CASE STUDY
contribution. Organizations also provide recognition
awards for long service. The organizations reward
their employees in varied ways. While most provide
gifts in cash, others give out gold medals, watches,
plaques, etc.
Management of Technical Organizations & Practices
59 ARMY WELFARE TRUST – A CASE STUDY
CHAPTER 3
WAY FORWARD
Management of Technical Organizations & Practices
60 ARMY WELFARE TRUST – A CASE STUDY
CHAPTER 3
3.1 Suggested Measures
3.1.1 Expansion of Committee of Administration . COA has to play a pivotal
role in achieving the restructuring objectives and future success of AWT. COA is
the highest governing body and de-facto is a direct stakeholder in AWT. It is felt
that the COA does not meet frequently enough for decision-making and mostly
relies upon the input of AWT Management. This plan in addition to the already
defined primary functions foresees a more proactive role of COA in future, by
assuming the role of investors and BOD comparable in private sector. It is
proposed that MD AWT instead of being part of COA meetings in attendance
may be made a member.
For the purpose of providing COA with professional and technical
support, the COA is envisaged to expand. The COA will include at least three
non-executive members from the private sector. These members would ideally be
industry leaders and respected entrepreneurs, with experience and capability of
effectively leading large groups or organizations and should not be from
competing industries. It is further suggested that the COA may have its own
Secretariat which will help the COA in its monitoring functions, ensure
implementation of the guidelines given by the COA, organize COA meetings etc..
One of the primary functions of the COA is to take large scale investment and
disinvestment decisions, in order to supplement the key decision making process
it is recommended that the COA may hire services of professional analysts to
determine the financial and operational viability as well as the market potential of
the project, these services can be hired on case to case basis or by developing an
in-house team for this purpose. These analysts may include professionals from
finance, manufacturing and marketing. The COA will meet each quarter in order
to set strategic directions, monitor results and take strategic level decisions. The
COA will be responsible for appointing and removal of the MD AWT and
Management of Technical Organizations & Practices
61 ARMY WELFARE TRUST – A CASE STUDY
members of the Board of AWT and fixing their remuneration and terms of
appointment.
3.1.2 Core Teams
One of the major problems faced by AWT has always been professional
and technical input during decision making, advisory and control processes. The
BOD predominantly comprises members having no or little experience of
managing large scale, diversified and complex businesses. Competitive business
environment, timing and quality of business decisions is vital and demands
technical and professional input.
In addition, the role envisaged for the corporate office of AWT is of a
value adding parent and value addition is hardly possible without requisite
technical and professional competencies, which at present are lacking in the top
Management of AWT.
For the purpose of bridging the gap it is proposed that a core team of
professionals be recruited. The recruitment and selection of the core team will be
made by the MD in consultation with the BOD and recruitment professionals.
This team will fill the technical and professional competency gap within the
corporate office. The team will report directly to the MD AWT and will be
supported by small layers of professionals. The BOD and core team will not be
involved in project operations instead they will act as direction setters and
facilitators for achieving results. The team will also be part of the panel
responsible for recruitment of key personnel at corporate office and it's BUs.
The core team will comprise the following:
a. Chief Operating Officer assisted by Investment and Monitoring,
MIS and Operations Department.
b. Chief Financial Officer assisted by Treasury and Finance &
Accounts Department.
c. Chief Risk Management Officer assisted by Internal Auditing
Management of Technical Organizations & Practices
62 ARMY WELFARE TRUST – A CASE STUDY
Department.
d. Secretary.
e. Chief Human Resource Officer.
The core team of professionals will fill in technical and professional
competency gap at corporate level and add value to the business. Role of the core
team will be of planners, facilitators and advisors. BU and their function heads
will functionally report to the core team on all professional and technical issues.
The core team will also be responsible for the change management in direct
consultation with the AWT BOD.
Key actions that are required to be taken in respect of the core team are:
a) Prepare position profiles and fix duties and responsibilities of the
core team.
b) Define relationships between the core team, the MD, the Directors
and the Bus.
c) Fix remuneration package and terms of employment of the core
team;
d) Appoint core team of professionals.
e) Prepare a change management plan;
The concept of core team has been introduced in order to augment the skill
set and professional expertise of the top Management of AWT. On the other hand
while refraining from unnecessary interference in the operations, the core team is
envisaged to provide professional and technical support to the professionals at
BUs as and when requested / required or instructed by AWT BOD. The rationale
for recommendation of core team directly reporting to the MD has been made on
the basis of the fact that the ultimate responsibility for achieving the bottom line
and smooth functioning of the operations of the BUs lie with MD AWT and
therefore it is logical that the core team directly reports to the MD AWT.
3.1.3 Revised Role of Board of Directors
Management of Technical Organizations & Practices
63 ARMY WELFARE TRUST – A CASE STUDY
The role, responsibilities and powers of the Board of Directors as
stipulated in the administrative order covers direction, consultation, advice, co-
ordinating and control, whereas the role currently assumed by the BOD is focused
on operations of the BUs. The involvement of Members of the Board in the
operations is contradictory to the role of advisory, coordination and control.
The BOD will not be involved in operations of BUs nor will any member
be responsible for achieving results at BU level. A core team of professionals will
be appointed to augment the skill sets and professional expertise and assist MD
and BOD members on technical and functional issues. The core team will be the
monitoring arm of the AWT BOD and will ensure compliance with policies,
procedures and consolidated business plan of AWT. Without exercising any
executive powers, members of the BU Board will monitor progress on BU
business plans on the basis of periodic progress reports prepared by the BU
Management and review comments of the core team and advise the AWT Board
accordingly.
Key actions required are to:
a) Re-define relationships between Directors, MD, the core team and
the BUs.
b) Define duties and responsibilities of the AWT and BU BODs
under the new structure.
c) Disband current Divisional structure.
d) Form audit committee and fix responsibilities, accountabilities and
powers;
e) Improve remuneration of the Board Members to reflect greater
accountabilities and responsibilities.
f) Ensure compliance with good corporate governance practices
under guidance from the code of corporate governance.
3.1.4 Improvement in Organizational Structure
Management of Technical Organizations & Practices
64 ARMY WELFARE TRUST – A CASE STUDY
Organizational structure of AWT will support achievement of a clear
distinction between strategic and operational management. The responsibility for
achieving functional goals will be shifted to the BUs, whereas the corporate office
will be responsible for overall direction and goals setting, corporate level
strategies, business facilitation and monitoring of results. The structure will also
support decentralization and cost and profit centers, with greater business
autonomy devolved to profit centers, using the organizational restructuring to
enhance functional relationships and simpler reporting lines.
Key actions required are to:
a) Redesign the organizational structure to support decentralization
and cost and profit center concepts, with responsibility for
achieving performance goals at each level of organization
b) Formulate, disseminate and implement:
1) A revised organization chart.
2) Prepare materials for and deliver training for the adoption
of the decentralization, profit and cost center concept and
its operations.
3) Decentralization, profit and cost center policy, systems and
operating procedures.
4) Revised Head Office and BU mandates.
5) Dismantle current Divisional structure at the AWT Head
Office; and
6) Capacity building at the BUs and appoint appropriate and
qualified manpower.
3.1.5 Improvement in Planning Process
Planning process at AWT is restricted to annual budgeting exercise. The
planning at all levels is ad hoc, impulsive and mostly directed towards fire
fighting. Organization at all levels does not have defined goals and objectives and
in turn do not know what good performance would look like. AWT up till now
Management of Technical Organizations & Practices
65 ARMY WELFARE TRUST – A CASE STUDY
even did not have vision and mission statements. Lack of business planning at all
levels of Management has created fundamental problems for AWT. Budgets are
prepared and financial targets are generally set without any verifiable basis. The
organization does not seem to have purpose and aim. Strategies at all levels
including corporate, BU and operational level are incomprehensive intern
strategic and operational intent of AWT is also deficient.
There is a fundamental need for initiating a comprehensive planning
process. The plans will be prepared to achieve strategies, goals and objectives.
The planning process will include initially plans for closing of BUs and induction
of professional staff thereafter the planning process will be focused on
development of corporate plans. One of the most important jobs entrusted with
the core team will be preparation of a three year rolling corporate plan. The plan
will cover corporate level strategies, objectives, goals and strategic intent.
Objectives and goals will be broken down to BU level, which in turn will form
basis for business plans of respective BUs. Strategies covered in the corporate
plan will include investment portfolio, resource allocation, HR, financial
management, IT, risk management, alliances, mergers acquisition and corporate
governance strategies. While, business plans at BUs will cover operations,
marketing, HR, information systems, procurement (where applicable) and
financial management.
Business planning at AWT will be a consultative process and will
comprise two tiers three year rolling strategic planning at AWT corporate office
and business & operational plans at BU level. Strategic plan will spell out vision,
mission and strategic intent of AWT as well as determine the individual BU level
goals and objectives. The strategic plan will dovetail into the BU business plans
which will form the basis for BU level operational plans. BU level plans will be
prepared to meet the expectations of the corporate office and will also fix
qualitative and quantitative goals at each business segment. MIS at each level of
AWT will cater for the monitoring and implementation of plans at each level and
in each quarter.
Management of Technical Organizations & Practices
66 ARMY WELFARE TRUST – A CASE STUDY
The key actions required are to:
a. Formulate, publish and disseminate vision and mission statements
of AWT.
b. Prepare and rollout a 3 year strategic plan, which should be aligned
with the vision and mission of the organization.
c. Prepare and rollout business unit level plans.
d. Monitor implementation of plans and revise as and when required.
e. Evaluate performances at each level of organization against
performance measures set in plans.
3.1.6 Investments
Investments will be made by AWT following defined portfolio logic. All
investment proposals submitted for approval to COA will be supported by
professional feasibilities demonstrating project viability and organizational
capability of AWT to undertake the project. BUs giving poor or no returns, with
little hope for turnaround while also being beyond the scope of portfolio logic,
will be disposed off or divested. Project implementation will be carried out by
professionals in an efficient and cost effective manner.
The key actions required are to:
a. Formulate portfolio logic for investments.
b. Fix investment return benchmarks.
c. Formulate and implement policies and procedures for initiating,
approving and undertaking investment proposals.
d. Formulate Investment and Monitoring Department, appoint
members and fix their duties, responsibilities and powers.
e. Dispose off or divest BUs not in line with investment strategy of
AWT.
f. Formulate, approve and implement a project implementation
manual.
g. Monitor project implementation through effective MIS.
Management of Technical Organizations & Practices
67 ARMY WELFARE TRUST – A CASE STUDY
3.1.7 H uman Resource Management
Corporate culture of AWT is more close to public sector organization.
There is no effective system of performance management. There is no incentive
for good performers. No formal career progression system is in place and very
little or no importance is attached to employee development, which results in
lower motivation of employees. HR policies are out dated and the same are being
practiced by the Head Office and most of the BUs. Fundamental HR management
functions like recruitment, performance management and compensation are
flawed and not suitable to sustain commercial operations. Work environment is
not enabled to support and facilitate efficiency. Employees are offered fixed term
employment contract and there is low employee association with the organization
and employee turnover is high. Above all there is a dearth of competencies and
skills in AWT due to not adhering to right person for the right job. All of the
above symptoms point to an HR system with no or little potential to support
efficient profitable operations. There is a need to align HR function with the
business practices. The direction set out below will assist in achieving such
objectives.
a) Engage core team of professionals, preferably through independent
consultants;
b) Engage consultants for devising position profiles prepared to support
business processes in line with revised organizational structure.
c) Match position profiles with incumbent profiles and assess suitability as
well as training requirements through training needs analysis (TNA);
d) Identify existing employees fit for newly suggested position profiles, and
commence training where required, through development and
e) Implementation of a training programme.
f) Recruit and select professionals at BU level through independent process;
g) Phase out existing employees not suitable as and when employment
contracts expire;
Management of Technical Organizations & Practices
68 ARMY WELFARE TRUST – A CASE STUDY
h) Engage consultants for:
1) Formulation of policies and procedures for recruitment and
selection, career planning and development, performance
management.
2) System and setting criteria for setting performance targets;
3) Development of job profiles, comparing existing staff with the job
profiles, and identifying redundant staff;
4) Preparation of human resource management manual;
5) Conducting compensation and benefits survey to assess job market
situation;
6) Offer employment contracts in line with prevailing market trends;
and
7) Assisting core team in the preparation of transition plan.
3.1.8 Management Information System
The current Management Information System of AWT, including all its
BUs, will be assessed for identifying the improvements required therein. Analysis
would incorporate the results of the process studies for AWT, the proposed
Business Process Re-engineering methodologies, and the IT Risk Analysis and
related risk management techniques, along with the suggestions mentioned
throughout this report. The improvements should ensure the orderly and efficient
conduct of business, and timely delivery of accurate information to support all
levels of decision-making.
The key actions required are to:
a) Work in association with Askari Information Systems (Pvt.)
Limited (AIS) and AWT Technical Division or outside agencies
during
b) Implementation of MIS.
c) Engagement of independent consultants to perform the following
tasks:
Management of Technical Organizations & Practices
69 ARMY WELFARE TRUST – A CASE STUDY
1) Detailed evaluation of the business processes, business
process re-engineering, and business process automation,
where appropriate for the development of MIS. This
evaluation would include, among other critical processes,
the accounting and reporting function in relation to the
BUs;
2) Determine system hardware and software requirements;
3) Devise reporting formats in consultation with the MIS
users; and
4) Provide training for use of the applications designed.
3.1.9 Finance
AWT will develop funding mechanisms appropriate to the suggested
business strategy and create financial management systems that enhance
management capacity to conduct the business to the mutual benefit of all
stakeholders.
Key Actions
The key actions required are to.
a) Complete financial restructuring scheme by rescheduling,
reorganizing and renegotiating AWS and other outside debts still
not worked on;
b) Finalize the financial restructuring scheme for the cement
units, including corporatization strategy for a merged
cement project. Since this area requires an expert
knowledge of the technical, legal and taxation implications
of such a merger, the case for obtaining services of an
expert consultant in this regard should be considered as
well;
c) Reduce exposure in cement and implement the
corporatization and merger scheme if it is found beneficial.
Management of Technical Organizations & Practices
70 ARMY WELFARE TRUST – A CASE STUDY
d) Identify information needs for improved financial analysis
and management and incorporate them in the upgraded
MIS.
e) Assess fair market value of each BU and compare its
performance therewith;
f) Recapitalize BUs based on fair market value and
restructure balance sheet;
g) Replace, as far as possible, expensive AWS debt with
outside debt at lower rate of interest.
h) Segregate the accounting and finance functions throughout
the entity, with accounting function dealing with
bookkeeping and reporting responsibilities and finance
function dealing with the financial management of the
projects.
Management of Technical Organizations & Practices
71 ARMY WELFARE TRUST – A CASE STUDY
3.2 Proposed Restructuring Plan
The restructuring which we are proposing has been devised to cover all activities
essential to achieve the requisite restructuring objectives. As with any restructuring plan there is
still room for additional professional and technical input by the professional management
envisaged at the core of the restructuring exercise. This plan recognizes that the management
should be given enough space to take and implement decisions based on the ground reality.
The objectives of the restructuring plan are to remove existing short comings in the
management and organizational structure as well as management style at AWT on one hand and
on the other hand to transform the organization to support achievement of AWT’s vision mission
and objectives. In this plan the BOD has been considered as inclusive of MD unless specifically
mentioned otherwise.
Major areas requiring restructuring include:
a. Improvement of governance;
b. Organizational restructuring;
c. Business planning;
d. Investments and portfolio management;
e. Human resource management;
f. Information services
g. Finance and financial management;
h. Risk management initiative.
Organizational Restructuring
The initiative of organizational restructuring will commence with and will be dependent
upon appointment of the core team and appointment of qualified and professional BU heads and
in this regard will be linked with the human resource initiative. The relationships between
Directors, the MD, core team and the BUs will be redefined in line with the guidelines given in
this plan.
The core team will include the following key positions:
a. Chief Operating Officer
b. Chief Financial Officer
Management of Technical Organizations & Practices
72 ARMY WELFARE TRUST – A CASE STUDY
c. Chief Risk Management Officer
d. Chief Internal Auditor
e. Secretary (as existing)
f. Chief HR Management Officer
g. Group Head Operations
h. Group Head Treasury
i. Group Head Finance and Accounts
j. Group Head Investment and Monitoring
k. Group Head MIS/ IS
l. Group Head Administration
Human Resource Initiative
Restructuring activity will commence with the approval of the plan by the competent
authorities, followed by induction of a core team at the Head Office level. The core team will be
hired with the help of independent consultants. The core team will conduct situation analysis and
immediately take steps for implementation of this restructuring plan. The core team alongwith
Director designated by MD AWT will also be the change manager and will be accountable for
efficiency of implementation of this restructuring plan. The steps which shall be taken by the
team will include:
a. Implement the overall restructuring initiative
b. Selection and appointment of information systems consultants with the approval
of BOD
c. Selection and appointment of Human resource consultants with the approval of
BOD
d. Selection and appointment of professional BU heads with the approval of BOD
e. Development of business plans for the projects in consultations with BU heads
f. Identification of redundancies and staff requirements
g. Introduction of new monitoring and performance evaluation system for all the
projects
The authorities, job responsibilities, job profiles and requirements of qualification and
experience for all the critical posts within the Group will be redefined and aligned with the
Management of Technical Organizations & Practices
73 ARMY WELFARE TRUST – A CASE STUDY
overall corporate objectives of AWT. The organizational structure will be redesigned to support
decentralization and cost and profit center concepts, with defined responsibility for achieving
performance goals at each level of organization.
The HR consultants will prepare HR manual and will be required to identify, mechanized
and non-mechanized business processes and prepare and update position profiles in light thereof.
Proposed general position profiles of key positions have been given as appendices A -M of the
report. These position profiles are suggestive and subject to revision on the basis of further
analysis. The human resource will be split into professional and support staff. Position profile
will be matched with skills and competencies of existing incumbents, with particular emphasis
on the professional staff. Based on profile matching, lists of existing staff to be retained and to be
made redundant will be prepared. Care will be taken that, as far as possible, existing employees
will be retained and any competency gaps which could be filled will be bridged through training.
This policy of retention would be applied particularly to the support staff, and they will only be
made redundant where absolutely necessary. However, the consultants would ensure that the
future hiring by AWT is based entirely on merit. Further, specific position profiles for all the BU
heads will be prepared and profiles of incumbents will be matched therewith. For guidance, a
generalized profile of BU head has been included in the appendix-M of this report. BU heads
matching the position profiles or easily trainable will be retained and developed further. further
and all others will be placed on the list of employees to be made redundant. Training Need
Assessment (TNA) for the staff to be retained, will be carried out to determine the training needs
for retaining and better utilization of the existing staff. All vacant positions will be filled through
an independent and transparent process.
The HR initiative will include improvement of recruitment, selection, performance
management and career progression process. In addition, steps will be taken to make
compensation and benefit packages and terms and conditions of employment competitive. These
activities will be in line with new corporate vision of a lean and effective organization. These
policies and procedures will form the basis of HR manual which will be the final deliverable of
the HR consultants. For the purposes of bringing the compensation and benefits in line with the
market trends, consultants will be engaged to conduct compensation and benefits survey.
Compensation packages and employment contracts will be revised in light of the findings of the
Management of Technical Organizations & Practices
74 ARMY WELFARE TRUST – A CASE STUDY
survey report.
Information Systems (IS) Initiative
A separate MIS Department will be formed and would be directly reporting to the Chief
Operating Officer. The Department would endeavor to provide for all the information
requirements of the Group and its projects, including information required for decision-making.
The Department would obtain all pertinent operating information from the BUs and summarize
and analyze the information in a manner which is useful for the decision-makers. A standard
procedure for information collection, analysis, compilation, reporting and storage would be
devised by the Department. They would therefore be responsible for liaising with all the projects,
mutually assessing their information needs, facilitating the provision of complete, relevant and
timely strategic information to the Higher Management, including the MD, BOD and core team.
Research Paper helphttps://www.homeworkping.com/
Management of Technical Organizations & Practices