Performance Management Report on Bank Alfalah & Askari Bank

Performance Management Report on Bank Alfalah & Askari Bank

Performance Management Report on Bank Alfalah & Askari Bank

C:\mohsin laptop\d drive\DownlaodsPerformance Management Report on Bank Alfalah & Askari Bank Submitted To: Mr. Jahangir AliGroup Members:Mariya Maher ------------------- (1235202)Shahbano Nasrullah -------------------(1235239)Mohsin Rahim ------------------- (1235253)Maryam Zaheer ------------------- (1235251)Submitted on: 12th April, 2014

Table of Contents2Performance Management System:

3Askari Bank

3Introduction:

3HR Department:

4Organizational Structure:

9Performance Planning:

10Performance Monitoring:

10Performance Evaluation:

12Introduction

12Human Resource Department of BAL

14Organizational Structure

14Grade Structure

16Salary Ranges & Allowances for Officers and Executives

18Forced distribution Ranking Method

18Evaluation

19Promotion Policy of Bank Alfalah Ltd

19Recommendations

19Bank Alfalah

20Askari Bank

Performance Management System:Performance management is a holistic approach to optimizing human capital, which enables an organization to implement short, and long-term results by building culture, engagement, capability, and capacity through integrated talent acquisition, development, and deployment processes that are aligned with the business goals. It is an ongoing, continuous process of communicating and clarifying job responsibilities, priorities and performance expectations in order to ensure mutual understanding between supervisor and employee. It involves clarifying the job duties, defining performance standards, and documenting, evaluating and discussing performance with each employee.

Askari Bank

Introduction:

Askari Bank Limited Formerly known as Askari Commercial Bank Limited. Askari Bank LTD was incorporated in Pakistan on October 9, 1999 as a Public Limited Company and listed on the Karachi, Lahore, and Islamabad stocks exchanges. The registered office of the Bank is located at AWT Plaza, The Mall Rawalpindi. The Bank has 200 branches (2007: 150 branches); 199 in Pakistan and Azad Jammu and Kashmir, including 18 Islamic Banking Branches, 11 sub-branches and a wholesale bank branch in the Kingdom of Bahrain.

Bank is playing a leading role in the Banking sector with broad product lines & customer need based services. Bank is operating with 200 branches in conventional banking as well as Islamic banking moods of financing. Bank is leading the way to the most modern and dynamic banking in the country.

The Vision: To be the bank of first choice in the region

The mission: To be the leading private sector Bank in Pakistan with an international presence, delivering quality services through innovative technology and effective human source management, in a modern and progressive organizational culture of meritocracy, maintaining high ethical and professional standards, while providing enhance value to all our stakeholders and contributing to society.

HR Department:This section includes a summary of the HRM practices followed in ACBL and a detailed study of Training and Development. The most important Division at the Head Office is responsible for human resource management,including planning, recruitment,staffing,training&development, compensation,performancemanagement, employeerelationandevaluation. The division alsohandlesmattersrelatingtoadministrationthatprovesan integrative linkage (34)between HRD and Administration.Organizational Structure:

Compensation: Askari Bank places itself amongst the better paymasters within the industry and continuously endeavors to improve the level of job satisfaction of its employees through learning, development and making Askari Bank the best place to work.

Job Evaluation: Askari Bank shall assign a grade level to each job with relevance to the value contributed by the role towards the achievement of organizational goals. The salary of experienced employees may vary due to qualification, experience, past appraisals and nature of skills. Minimum salary in different grades of fresh /non experienced staff shall be determined by the President and CE on the basis of qualification, grading of the university and average salary levels in the banking industry.

Salary Structure: Gross salary of an employee shall comprise of three (3) components, Basic Salary, House Rent Allowance and Utility Allowance. In addition to the above, the employees will be reimbursed Medical Allowance and Fuel/Conveyance Allowance as per entitlement, with a monthly salary. Net Salary of an employee will be arrived at by deducting provident fund contribution, income tax, loans installments, EOBI contribution and any other statutory deductions from Gross salary.Basic Salary

i. Basic salary of an employee shall be determined by the competent appointment approving authority.

ii. On promotion to a higher grade, salary shall be fixed by giving an appropriate increase in the basic salary, as approved by the competent authority.

iii. The annual increment will be on the basis of %age of the basic salary which will vary as per performance rating of the employee and as approved by the competent authority.

iv. An increment cannot be claimed as a matter of right, but it depends on the discretion of the Competent Authority. The Competent Authority may allow additional incremental on the basis of performance.

v. As working guidelines, the HRD shall prepare minimum basic pay to be offered to a fresh employee in a specific grade on the basis of qualification and the institution from where they have been obtained. While for experienced candidates, pay can be fixed in any grade to commensurate his/her experience and keeping in view previously drawn salary/market pay, as approved by the competent authority. The guideline specifying minimum pay etc.; will be finalized with the approval of HR Sub-Committee.Other Allowances:

Reimbursement of Residential Telephone Expenses: The monthly telephone expenses for residential phones shall be reimbursed on the production of telephone bills as per following entitlement.

GradesMonthly Limit

SEVPRs.6, 000/-

EVPRs.3, 000/-

SVPRs.2, 000/-

VPRs.1,000/-

AVPRs.860/-

House Rent Allowance: An employee shall be entitled to receive from the Bank a house rent allowance @ 45% of the Basic salary.

Utilities Allowance: The utilities allowance for monthly gas, electricity and water charges (Residential) etc. shall be admissible to all employees @ 10% of Basic Salary.

Medical Reimbursement: Reimbursement of Medical expenses shall be made in cash each month with the payroll equivalent to 10% of the Basic Salary.

Fuel Reimbursement: Expenses incurred on fuel expenses shall be reimbursed along with a monthly salary as per the premium fuel price during the month. Fuel expenses shall be reimbursed subject to following monthly limits:

Sr. No.GradeFuel in liters

1SEVP650

2EVP500

3SVP400

4VP350

5AVP150

6MG120

7AMG100

8OG-I80

9OG-II70

10OG-III60

Average rate of petrol during the month shall be applicable for reimbursement of fuel expense.

Special Allowance: An employee may be allowed a special allowance as may be determined by the competent authority from time to time.

Additional House Rent on Transfer/ Relocation Allowance: An employee shall be entitled to an additional house rent allowance/ relocation allowance as determined by the competent authority on a case to case basis upon his transfer/posting from one city to another city subsequent to a decision of the management, for operational and other reasons, made in the best interest of the bank, provided that the transfer/posting is not effected on the request of the employee or on grounds of discipline, and subject to following maximum limits:

MarriedUnmarried

SEVPRs.60, 000/-Rs.40,000/-

SVP/EVPRs.40, 000/-Rs.25,000/-

AVP/VPRs.25,000/-Rs.15,000/-

OfficersRs.15, 000/-Rs.10,000/-

OthersRS.8, 000/-Rs.5, 000/-

Furniture, Fixture & Electrical Appliances for Executives

Entitlement: All executives shall be allowed to purchase furniture, fixtures and electrical appliances for their residence as per following entitlement:

GradeEntitlement

Senior Executive Vice PresidentRs.280,000/-

Executive Vice PresidentRs.230, 000/-

Senior Vice PresidentRs.185, 000/-

Vice PresidentRs.140, 000/-

Assistant Vice PresidentRs.100, 000/-

Cash Handling Allowance:

All staff working full time in the cash department in the branches and handling cash shall be paid cash handling allowance equivalent to Rs. 3,000/- per month.

Fixed Bonus

This type of bonus shall be rewarded equal to X number of Basic salary to all the regular employees of the bank. Basis for Contractual staff shall be 50% of that of regular staff. The staff who joins the bank during the year receive bonus as follows;

Those who join during 1st quarter shall be paid 100%

Those who join during 2nd quarter shall be paid 75%

Those who join during 3rd quarter shall be paid 50%

Those who join during 4th quarter shall be paid 25%

The fixed bonus shall be paid to an employee who retires from the service of the Bank during the year on a prorated basis. This shall also be paid to the employee deceased during the year on a prorated basis. Variable Performance Bonus: In addition to regular compensation benefits to employees, Askari bank provide for a Performance based Bonus. This policy is designed to fairly reward top performers with variable bonuses to attract, retain, and appropriately reward talent making Askari bank the employer of first choice in the marketplace.

This bonus is awarded to regular employees only and is determined on the basis of individual performance during a year as determined through his/her performance evaluation. Star performers shall also be identified during the performance appraisal exercise.

The performance bonus shall be linked to individuals performance rating. The grid for award of performance bonus shall be approved by the competent authority each year and shall be awarded after the finalization of performance evaluation exercise. Staff members who are rated D & E shall not be considered for bonus while staff members rated C may be considered depending upon the size of the bonus pool available for distribution.

Loyalty Awards:

On completion of 10 years of Service 50% of Basic Salary

On completion of 15 years of Service 75% of Basic Salary

On completion of 20 years of Service 100% of Basic Salary & 10 gram gold coins.

Performance management System:

This policy will allow Askari Bank to propose and agree upon development / improvement initiatives and to reward staff members in line with their performance outcomes.

All Employees are required to go through the formal process of performance planning, monitoring and evaluation according to the terms of this policy. It may be noted that the evaluation part of the performance management process is carried out once at the end of each financial year. In certain cases, the Bank may also carry out a mid-term performance review as required. Two important points regarding performance management that need to be kept in view at all times are:

a. Performance management is a continuous process and the yearly exercise of completing the template is only a formal document and an agreement to this effect. In light of the same Line Managers are required to continuously monitor performance and provide feedback and coaching throughout the year instead of waiting for the year end.

b. Performance management is not a confidential or one-time personal assessment report of an Employee by a Line Manager. Rather, it is a two-way exercise in which the Employee must understand and also agree with his or her performance assessment ratings and performance improvement objectives.

The Askari Bank Performance Management System is divided into three (3) main areas namely:

1. Performance Planning

2. Performance Monitoring

3. Performance Evaluation

Performance Planning:

Performance Planning involves following the conventions of a comprehensive PMS policy and defining measures of performance through the incumbents job description, specific goals set for the year, and behavioral capabilities needed for the job. During this stage, the line manager must communicate the performance standards and weightings for the role using key accountabilities and behaviors. This should result in a discussion with the jobholder jointly agreeing upon on actions to meet role expectations. For the performance planning process, the following documents are included as part of this report:

1. Defining JDDs A detailed write up defining Job Description Documents and explaining the sections of their related JDD Template.

2. Job Description Document A form / template designed to capture all necessaryelements of a unique role. HRD will provide all JDDs for each unique role in Askari Bank as agreed upon in the new organizational structure.

3. Goal Setting Form A form designed to set goals that are based upon key accountabilities as mentioned in the job descriptions for the ensuring evaluation period.

4. About Job Families A detailed write up on the job family concept and its application to performance evaluation system.

5. Job Family Matrix A classification of Askari Bank Departments into job families and details of both basic and advanced attributes associated with each job family.

Performance Monitoring: Performance monitoring involves monitoring performance of the incumbent based on the above measurements throughout the year. This process involves identifying performance gaps and taking remedial action through regular feedback and coaching provided on a relatively informal basis. In certain cases, a mid-year performance review can be conducted (after a 6 month period) using a shortened PMS form as mentioned below

Mid-Year Performance Review Template A form / template designed to document and evaluate performance of Employees at the middle of the year. This template is generally used in select cases for Employees who are placed on a performance watch list.

Performance Evaluation: Performance evaluation involves completing the PMS template according to the PMS policy in which managers formally assess performance based on objective grounds and provide relevant feedback and recognition to deserving candidates. Through this assessment, improvement opportunities are discussed and agreed upon by the incumbent and his / her supervisor. To complete the performance evaluation process, we have designed and enclosed the following documents for Askari Bank:

Performance Management PolicyA formal write-up on Askari Banks performance management policy entailing both the theory behind evaluation and details explaining sections of the correlating performance evaluation templates usage.

Full-Year Performance Evaluation Template A form / template designed to evaluate performance of Askari Bank employees between OG-III and SEVP grade levels. This template is linked to the performance management system proposed by HRD in bringing about the major change in the way reward and promotion is perceived. A separate Performance Evaluation Template for Clerical/Non-Clerical staff is also developed.

Promotional Policy: The criterion for promotion in the Bank is based on the following factors:

Performance Appraisal: The performance of each employee is established, based on the Annual Performance Review. These reports contain a comprehensive list of character traits and the performance evaluation against already set objectives business development and training targets. Besides awarding Performance Rating to each employee, the Reporting Officer shall record his opinion with regard to general profile, present performance as well as give specific recommendations on suitability for future promotion or employment in a particular vacancy/assignment besides ascertaining the ultimate potential of the Appraise.

While awarding marks for the Performance Rating, the Appraise shall be compared with other employees of the same category at the entire bank level and not the branch level. This is essential from the point of view of maintaining uniformity of efficiency at the bank level. Similarly, the recommendations should also be in conformity with the marks awarded e.g. cases of promotion should fall amongst A or a high B.

Other promotion criteria are: Educational Qualifications, Professional Qualifications, Experience, Minimum Qualifying Service for Promotion, Marketing Achievements, Availability of positions, Special Provisions, Accelerated promotions, Qualification improvement, Promotion Approving Authorities.

Bank AlfalahIntroduction

Bank Alfalah Limited (BAL) was first established on June 21, 1992, under the Companies Ordinance 1984, as a Public Limited Company. However, its operations began on November 1, 1997 in Pakistan. Since then, the bank has adapted and implemented various policies that have helped it to strengthen its position and presence amongst various countries such as Pakistan, Bangladesh, Bahrain and Afghanistan (www.bankalfalah.com).

Backed by the Abu Dhabi Group, the bank boasts of diverse board of management and driven with the aim of growing continuously focuses its operations in commercial banking and has a diverse portfolio of goods and services to offer to its clients. Bank Alfalah Limited currently has over four hundred and six branches across a hundred and fifty-eight cities including seven international branches and a offshore unit in Bahrain. The Bank added twenty new branches in 2011 alone. In Karachi, their head office is located at B.A.Building at I.I.Chundrigar Road.

Some of the associated companies of the Bank includes other industry bigwigs such as Warid Telecom (Pvt.) Limited, Alfalah Securities, Alfalah Insurance Company Limited and Alfalah Investment Management Limited.

The Vision of the Bank states it to become a premier organization at both local and international level to provide all possible financial services under one roof.

The Banks Mission instates it to develop and deliver customer-oriented services that attain the bank both profitability and market, while also garnering customer value and loyalty.Human Resource Department of BAL

At Bank Alfalah Limited the human Resource motto is described as We are Struggling for People. Like any other organization, HR department of Bank Alfalah acts as a vital organ to the organization, it is also important to mention that the HR department at BAL acts as a strategic partner to the bank, in fulfilling all its workforce related needs and functions. As this department is specifically focused to carry out the following key functions of the organization Conducting job analyses (determining the nature of each employees job) Planning employee needs and recruiting job candidates

Selecting job candidates

Orienting and training new employees

Managing wages and salaries(compensating employees)

Providing incentives and benefits

Appraising performance

Communicating (interviewing, counseling, disciplining)

Training and developing managers and executives

Building employee commitment

Other Key Departments

Bank Alfalah Limited has various departments/divisions, a complete list of these includes Strategic Planning & Global Marketing

Corporate Banking & Home Finance

IT Division

Credit Monitoring System

Credit Division

Systems & Operations

Legal Affairs Division

HR Division

Business Development Business

Finance Division

International Operations

Islamic Banking

Audit & Inspection Division

Cards Division

Administration

Organizational Structure

The organizational structure of Bank Alfalah Limited is as follows:

Compensation System of Bank Alfalah SystemGrade Structure

Bank Alfalahs salary ranges provide a structure to which basic rates of pay is linked to various positions. All the employees placed in these ranges are based on seniority level, current responsibilities, and market value of these jobs. The constituents of a pay range are minimum pay, maximum pay and a midpoint. Freshly appointed employees are given the midpoint salary, which is usually considered as the market rate for the job in question. This salary usually falls in the 60th to 65th percentile. As the employees become more experienced, their salaries are moved above the midpoint, thus defining their level of seniority.

However, the decision of assigning the salary of any employee remains with the authorized managers, which can be set at any point of the predefined salary range for the relative grade. BAL salary ranges start with Range I (entry-level position) end with Range IX [Group Head/ General Manager level position]. These ranges reflect an individuals position, responsibilities, size of the operation (Branch / Dept.) and scope of assignment. Based on these considerations, various positions fall into BAL Salary ranges as follows:

Job PositionsGrades

Group Head/ General ManagerIX

Head of Division/ DGM/ Regional Manager/ Regional Heads/ Product HeadsVII - VIII

Senior Managers at HO and Group Offices/ AGMVIII

Area Managers/ Zonal Managers VI - VII

Branch Managers according to size of the branch

Team Leaders according to size of portfolio

Head of Department of Large Size Branch (Credit/ Trade Finance/Operations Manager etc.)

National Sales Managers

Head of Large Department at Head Office DivisionV VII

Head of Credits/Foreign Trade/Operations Dept. of Medium size Branch

Relationship Managers at SME

Dept Heads at HO with more than 5 years relevant experienceIV - V

Head of Dept at Small size branch

Branch Sales Officer or Branch Sales Supervisor

Senior Officer at HO Divisions with more than 5 years of relevant experience

Secretaries of Group Heads & GMIII - IV

Credit Officer or Trade Finance Officer

CD In-Charge or Chief Cashier of Large size branch

Officers with more than 3 years of relevant experience ( Officers at Head Office, Officers of Consumer Finance, Mortgages, SME, Rural Finance, Leasing, General Banking, Operations, Cash, CD In-Charge, IT, Accounts, Customer Service/ Relationship Officer etc.)

Secretary with 5 years or more relevant experience

MTO (Post Graduates or foreign qualified)III

Fresh Officers Post Graduates or 4 years BBA/BS etc

Officers who are Graduates with less than 3 years of relevant experience (Officers at HO, Officers of Consumer Finance, Mortgages, SME, Rural Finance, Leasing, General Banking, Operations, Cash, CD In-Charge, IT, Accounts, Customer Service Officer etc.)II

Entry level position / Fresh Graduates / Cash/Operations OfficerI

Salary Ranges & Allowances for Officers and Executives

Since the exact salary of each grade has not been shared by the bank for confidentiality issues, apart from the starting basic salary of Grade I personnel, we have assumed the minimum and maximum salaries for each grade. The organizational structure followed by Bank Alfalah is narrow banded so the overlap and range limits have been applied accordingly (Range= 1.1; Overlap= 0.4). The allowances are also assumed to the nearest possible percentages and amounts for each.

(All Amounts in PKR)

GradeBasic Salary Ranges (Min-Max)House Allowance

(% of Basic)Utility Allowance

(% of Basic)Conveyance AllowanceDrivers AllowanceFurniture AllowanceTelephone AllowanceCellphone Allowance

I20000-4200040%10%3100----

II28000-5880040%10%4650----

III39200-8232040%10%6200----

IV54880-11524840%10%7750-17000--

V76832-16134740%10%9300-17000--

VI107565-22588640%10%--17000--

VII150591-31624140%10%-45000310002000015000

VIII210827-44273740%10%-50000420003000020000

IX295158-61983140%10%-55000500004000025000

Note: The formula used for basic salary calculation by Bank Alfalah is

Basic salary = 0.607 * Gross Salary

Performance Appraisal System

Through performance appraisal, organizations assess each of its employees in a systematic manner. Where an employee performance is being measured against several factors including; job knowledge, quantity and quality of output, loyalty, leadership abilities, cooperation, decision-making abilities etc. Performance appraisal is highly important for all the organizations because it helps them to take decisions regarding; promotions, bonuses and incentives, employee training and determining the future workforce needs of the organization.

Bank Alfalah Ltd. also uses performance appraisal system in order to enhance the efficiency of employees. This system composes of setting targets or objectives in the beginning of the year, the progress of which is then determined by the respective supervising officer on half-yearly basis. Using the standard tools of performance evaluation such as appraisal forms, performance assessment is conducted. This helps the HR manager of the bank in gauging the work standards and employee performance, providing feedback and to eliminate performance deficiencies.

Appraisal Approach Adopted by Bank Alfalah Ltd

Forced distribution Ranking Method

BankAlfalahusesthebellcurveorforceddistributionmethodtoappraisetheiremployees.A forced distribution method requires rater to compare performance of employees andplaceacertainpercentageofemployeesatvariousperformancelevels.Itassumesperformance level in a group of employees will be distributed according to a bell-shaped or normal curve. Their criteria are base on the performance of quantity of output, quality of output, timeliness of output, presence at work and cooperativeness.

There is no favoritism and discrimination at any levelin the performance appraisal system. BAL uses 20-60-20 distribution the top 20 percent is rewarded for best performance, the middle 60% employees are rated as average and the bottom 20% are trained for improvement.

Thus, this method of appraisal is regarded as important by many HR managers and is commonly used by many organizations for rewarding the top performers and setting the specific deadlines for the improvement of poorperformers. However, this system has some drawbacks as well. For example, the systempromotes individual performance over teamwork and often leads to dissatisfaction between averageandpoorperformers.Evaluation

Besides, following forced ranking distribution method, BAL has also developed their own performance management process, which is performed biannually in the months of June and December. This approach is named as evaluation approach in which manager conducts thirty minutes interview with his subordinate to discuss about the projects and the goals that have been assigned to them and then rates the employee according to appraisal form established at the start of the year. Employees are aware of these evaluation criteria at the start of the year so that they can improve performance according to criteria set by the bank.

This performance management process differentiates the employees as following three categories

Partially performing: if an employee does not achieve his goals in given period, he would be rated as partial performing employee.

Performing: if an employee completes his work in the given time he would be rated as a performing employee.

Excellent: if an employee is doing the work designated to him as well as showing concern for other projects, he would be rated as an excelling performer.

After this, evaluation process is carried out where the employees who lie among the performing and excellent rank are given bonuses and only excellent employees are given performance bonuses as for their good performance. These are given to appreciate employees and to motivate partially performing and performing employees. After the completion of evaluation process manager discusses or provides feedback to the employees.

Promotion Policy of Bank Alfalah Ltd

Promotion to higher grades depends upon operational needs based on current assignment of the incumbent. The other important reason for promoting employees is to reward the high performing individuals, as and if the organization is itself growing, as the growing organization as BAL. The process of promoting employees the chosen employees is finally determined through an interview process conducted by the respective departments head and the HR representative illustrated as below.

For promotion to1st Interview2nd Interview3rd Interview

Ranges II, III, IV, VBM / Dept. HeadAM/ RM/ Div. Head/ GM/ GH-

Ranges VI and aboveBM / Dept. HeadAM/ RM/ Div. Head/ GM/ GH Panel

GM HR, Co-Chairman Executive Committees / CEO duly approve all promotion

RecommendationsBank AlfalahThe current compensation and performance management structure is quite good but definitely, there is a room for improvement, which helps BAL in reducing its employee turnover rate and increase employee loyalty and dedication towards the achievement of organizational goals. Therefore, there are some recommendations defined below for BAL:

Since BAL has different job families, so the organization should adopt such pay structure which is based on different job families that can define a varied salary pattern of the organization in the market.

Secondly, in order to minimize the tall hierarchal structure of the organization and bridge the distance between the employees and employers BAL should adopt broadband grade structure. The performance appraisal system of BAL is based on two methods forced distribution method and evaluation method both these methods are good enough to evaluate the performance of its employees but the constant feedback from the supervisors has been observed to be absent to the employees regarding their performance. This feedback is important as it helps the employees in improving their performance which in turn enhance the organizations performance.

Bank Alfalah doesnt have any goal setting policy for their performance evaluation system, like Askari Bank, who has developed and communicated clear policies about their performance structure and evaluation systems.

Therefore, in order to retain the qualified, talented, competent and motivated staff in the organization to operate their business activities effectively, a good recommendation to BAL is to timely modify its compensation and performance appraisal system as per the changing market trends.Askari Bank

Comparatively, Askari Bank has a proper outlined and structured PMS then Bank Alfalah. However, some key recommendations for improvement are listed as follows: The bank places great importance on performance monitoring phase in its annual evaluations. The parameters outlined by the management for this phase includes the employees having to discuss and set their own goals or targets for the upcoming year with their line managers and update and get them signed from them on the goal setting form. Although, the goals and targets can vary afterwards, for which they need to fill in/update their old or new forms and get it signed in by their line managers again. This is a tedious process and should be altered or be upgraded from paper to automated filing. The PMS of the bank places great emphasis to evaluate performance based on the targets achieved by an employee. A significant lack of emphasis made on evaluating the behavioral traits has been observed. Thus, it is recommended that the management incorporates or considers the behavioral aspect of the employee during their performance appraisal and evaluation.

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