PAKISTAN TOBACCO COMPANY

Pakistan Tobacco Company is the first-multinational company of Pakistan and recently

completed 54 years of its operations in the country. The company is the member of the
multinational British American Tobacco group, which employs over 100,000 people,
operates in 180 countries and is one of the top 5 FMCG trade-marketing companies in the
world.
PTC was incorporated in Pakistan and is listed on the three stock exchanges of the
country. It was established in the same year when Pakistan came into being in 1947, and
took over the business of Imperial Tobacco Company (India). In 1975 a new cigarette
factory was set up at Akora Khattak to meet the increasing demand. Akora Khattak
factory is now one of the largest factories of N.W.F.P.

Mission statement of Pakistan Tobacco Company

The mission statement given in the company’s annual report is as follows; “Transform
PTC to perform with the speed, flexibility and enterprising spirit of an innovative,
consumer-focused company” and long term vision of becoming “First choice for
everyone”

Brands of Pakistan Tobacco Company

 Golf Leaf
 Gold Flake
 Capstan
 Wills
 Embassy
 Benson & Hedges
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HUMAN RESOURCE MANAGEMENT AT PTC

 Hierarchy of HR Department

HR Manager

HR Admin Officer

Assistant HR manager
Assistant HR manager Assistant HR manager
leaf & GLT

HR Welfare Officer
HR Legal Affairs

Unionized Employee

Unionized Employee Unionized Employee

Recruitment
Recruitment is a searching for and obtains potential job candidates in sufficient number
and quality, to enable the organization to select the most appropriate people to fill its job
needs. First of all there is a requisition from a department for a post which if approved by
the HRD, it is advertised with full job description and specification in the leading
newspapers (it is also checked if the post can be filled from within or alternate solutions
are figured out in order to save hiring, training and other expenses). Thereafter, when a
pool of applicants comes up by the due date, the recruitment process comes to an end.
In PTC, employees from grade A–01 to A–10 are hired by Human Resource Department
whereas Business Support Officers BSO’s (grade A–30 to A–33) positions are
recommended by the HRD at the Factory to the Head Office. The recruitment of
Members of Management MOM’s (grade A–34 to A–37) is the responsibility of Head
Office where recruitment sources such as recruitment agencies, campus campaigns and
employees’ databanks are identified to attract world class candidates for the openings in
the company.

In PTC when a job vacancy arises, the following steps are taken in the process of
recruitment:
1. Recruitment Advertising (Internally or Externally)
2. Internal Vs. External Recruitment
3. Compilation of Applications / CV

There are two-principle methods of recruitment.

i. Internal recruitment
ii. External recruitment

Internal Recruitment
Commonly for position above the entry level the acceptable source of applicants may be
within the organization itself. To find qualified applicants within its own organization is
called internal recruitment.
In internal recruitment is through “job posting and bidding”. This process consists of job
vacancy notice on bulletin board.

External Recruitment
External recruitment is another method which is commonly user method. To find
qualified applicants without its own organization is called external recruitment. There are
many sources (universities, colleges, and other government, private sectors) from which
we can attract required employees.

Recruitment process for BSO’s

Recruitment starts from the requisition by the line manager and ends on
appointment/documentation.

• Role profile to fill a vacancy.

• Approvals by line managers and HR manager.
• Job/person specification.
• Invite applicants through any of the following resources.
 Advertise
 Head Hunters
 Direct Applicants
 Campus Campaign
• Short-listing of candidates.
• Preliminary interviews.
• Assessment canter/selection tests.
• Final interviews.
• Medical examination
• Appointment/documentation.

Development and Evaluation

There are two steps in development, training and evaluation process
i. Training and development
ii. Types of training programs

Training & Development

An employee is trained in accordance with the needs of the concerned department. The
HRD specifies needs of training and arranges courses, which can be carried out in the
country or abroad also. The annual report of the employee includes the courses he/she has
received. The courses include office management, communications, etc.
Other thing is the employee development. The difference between the employee training
and development is that, that training is present oriented activity while development is
future oriented. Employee development helps the employees and enables them to cope
the future challenges and perform the activities in the coming future.

There are three phases of training and development.

• Assessment phase.
• Training design and implement.
• Evaluation.

Types of Training Programs

There are different types of training programs, which are developed for different
employees.

Orientation
Orientation is always only gives to new employees which is selected by external
recruitment process. In this we give the information of all departments, such as head
office, regions, areas, factories and from where raw material comes.

Technical Skills Training

Technical skills means that the technique and other information which needs a workers to
work with a machine, what difficulties may comes in this process and how he work
efficiently.

Management Development Training

In management training you conduct a training program to managers to enhance their
skills such as communication, coordination and aware them the new working
experiences.

Overall Training
Training is a planned effort by a company to facilitate employees learning of job-related
competencies. These competencies include knowledge, skills or behaviors that are critical
for the successful job performance.

At PTC there is a continuous assessment of the technical and managerial skills for the
further enhancement of these skills formal training programs are offered at all levels. The
employees are provided with opportunities to put these skills into practice, in preparation
for the move to a managerial role. Training is viewed at PTC as a way of creating
intellectual capital. Employees are expected to acquire new skills and knowledge, apply
them on job and share this information with other employees. The training is cross-
functional for sharing of skills. The training programs also include International
Seminars.

Personal Opinion
According to our personal opinion PTC has a very systematic approach to recruitment.
The most important thing as far as recruitment is concerned they recruit qualified and
quality personnel. The example can be that for MOM’s they recruit only those students
who are graduates from good institutions i.e. IBA, LUMS, GIK, NUST etc. As far as
training and development is concerned PTC has a very good training and development
programs.
PTC recruits both internally and externally, but as the skill available internally is not
sufficient, so they have to recruit externally. And if a situation comes in which skill is
available both internally and externally they will defiantly go for internal recruitment.
The reason behind this is that because the internal employee won’t be new to the
organization and he will be aware of the culture of the organization.
Their training and development programs are fully sponsored by the organization. For
Example: Mian Hameed (HR officer) the person we interviewed was sent to get HR
Diploma from NUST and he was fully sponsored by the company, which includes
traveling, accommodation, fee, food etc. For training and development PTC reviews the
performance of the employee every year and according to that they judge who should be
sent for training. It is also observed in PTC that employees can ask management to send
them for training if they feel that it is necessary. In reaction the management reviews that
problem and decides whether he/she should be sent or not.
Selection
Selection of candidates follow after the recruitment procedure is completed. Thus the
selection under take to consider those candidates who applied for respective job and
decides which one should be given the appointment. Selection process typically consists
of the following steps.

 Advertising
First the post is advertised in the leading newspapers, and interested candidates are asked
to send their CV’s.

 Compiling the application forms

The application received after advertisements are compiled.

 Initial screening interview

The different applications are checked and the applicants who qualify the requirements
are selected.

 Employment test
Then there is a written test of the candidates who are selected and they have to go
through a proper written test.

 Assessment test
After the written test there is an assessment test. In which leadership qualities, teamwork,
individual burden handlings are checked.

 Comprehensive interview
Those candidates who are selected in assessment test are supposed to have a
comprehensive interview. In the comprehensive interview business questions are asked.

 Background investigation
In This section the organization checks the background of the employee, in which
previous organizations, contacts, work experiences etc are checked.

 Conditional offers.
The employer gives different packages to the new employee. In which salary, working
hours etc are decided.

 Medical and physical test.

The employee has to give a medical and physical test. In this section the organizations
want to assure that they are medically and physically fit.

 Final interview.
After doing all the tests the employee has to give a final interview in which timings,
branch office are decided.

 The permanent job offers.

In this stage of selection process the employee is been given a permanent job offer.

In first step they attract the people who are willing and having ability for that job. They
attract the people with advertisement in newspaper; go to different recognized institute
and the database or pool of application, which an organization has received already. After
screening from those applications here screening criteria are (education level, experience,
skills, etc). In next step they grade those applicants according to their education level,
experience, skills, university, etc. From third step they differentiate selected applicants in
to two groups. From third step the selection criteria is different.

Manager’s Criteria
In manager cadre those who are selected for next step the organization send them letters
in which initial interview date time are mention and also send them a form in which some
question about their previous career, functionality etc. The initial interviews are taken by
HR and the functional managers. The applicants who successfully cross this step, the next
step is Assessment center in assessment center in which the organization develop a
business environment to assess their managerial and non-managerial skills such decision,
communication, work in a group, individual, behavior, leadership and other. Later than
carry out the final interview, which is conducted by Functional Director or HR Director.
In next step the medical test of accomplishment applicants and then offer the package of
salary and all other benefits and allowances. When they accept the package then send
them to their position and the last step is joining.

Business Supporting Officers (BSO)

In Business Support Officers (BSO) cadre those who are selected for next step is
Aptitude and written test are taken by HR and the functional managers. The applicants
who successfully pass Aptitude and written test, later they carry out the final interview
which is conducted by Functional Director or HR Director. In next step the medical test
of accomplishment applicants and then offer the package of salary and all other benefits
and allowances. When they accept the package then send them to their position and the
last step is joining.

Personal Opinion
 Performance Appraisal
Performance appraisal at PTC is used to evaluate the job performance of employees. HR
department use the information gathered through performance appraisal to evaluate the
success of recruitment, selection, orientation, placement, training and other activates.
Formal appraisals are needed to help managers with placement, pay and other decisions.
This kind of formal appraisal in PTC for Business Support Officer is called Steps or
Success Through Performance Evaluation the method used for managers is called PACE
or the Performance Appraisal for Career Enhancement.
The appraisal forms are rated by the mangers or concerned authorities on the basis of
Core Skills and Functional/Technical Skills. The comparison of the actual level of
competency and the expected competency level which is also defined as meeting the
success criteria gives a true picture of where these employee stands. The strength and
weaknesses are analyzed and according to that a training program is arranged to
overcome the problems. In PTC a standard measure is a Success Criteria that reflect the
behaviors needed to embrace to meet the future demands.

Compensation
PTC considers its employees not just as a cost but as a resource in which the company
has invested from which it expects valuable returns. Pay policies and programs are one of
the most important human resource tools for encouraging desired employee behaviors.
The advantage of paying above the market average is the ability to attract and retain the
top talent available, which can translate into highly effective and productive work force.

Extra Pay for Overtime

If a worker works for more than nine hours in any day or for more than 48 hours in any
week in a non-seasonal or seasonal factory he shall be entitled in respect of overtime
worked to pay at the rate of twice of his ordinary pay.

Promotions
In order to retain employees and keep them motivated, the employees having good
performance can be promoted to the next higher post. There are two bases for promotion
in PTC - the suitability and Seniority. Suitability means the suitability of the person in
terms of his performance on the job and seniority means the time he has passed in PTC.
There are certain jobs to which eligible persons are directly promoted and do not require
any further training. But certain jobs require special training for a particular period. So,
when a person is to be promoted to these jobs they are provided with specified training.
There is an annual assessment form, which is used to grade employees. It depends upon
the work performance, quality of work, cooperation, versatility, general knowledge, and
punctuality and attendance of a worker.
Line managers do their assessments, their immediate bosses. That is from January to
December having remarks of unit manager, sign of in charge of department marks
according to percentage point system. In production upgrading is easy, group operator to
machine controller.
A8-A9-A10 while training promotion. A1-A6- takes nine months. A8-A9- takes eighteen
months.

Employee’s benefits and motivation

People join organizations for better living better and prosperous life. They expect some
monetary and non monetary benefits in return for the services they give to the
organization.

In PTC, there are mainly three levels of employees working in different departments; one
level is workers from grade A–1 to A–10. The second level may be classified as Business
Support Officers from grade A–30 to A–33 and the third level is Members of
Management from grade A–34 to A–37. HRD at PTC deals in the benefits available to
blue–collar workers (level 1) working in different departments.
Monetary benefits available to these workers may be classified as
• Wages and Salary;
• Incentives;
• Fringe Benefits; and
• Bonus.

Wages and Salary

PTC employs more than 1000 permanent workers in its Akora Khattak Factory. Out of
these workers, 909 are directly related with production where as 131 unionized
employees are working Leaf Areas in seasonal capacity.

The wages of workers in PTC are determined through salary reviews, job surveys and
through collective bargaining. In PTC, the minimum wage for a general grade A–1
worker is at least Rs.7, 000 per month. This also makes PTC as a preferred employer.

Incentives

In PTC, a Group Incentive Scheme called Special Incentive Allowance (SIA) is in

operation. Special incentives are given to all permanent workers in order to keep them
motivated and to achieve the targets and organizational objectives.
The Special Incentive Scheme in PTC is the result of restructuring that took place in 2001
in which about 1000 employees were separated from PTC through Voluntary Separation
Scheme VSS and Special Separation Scheme SSS. When those workers were separated,
their workload was shared by the remaining workforce. This scheme is provide to the
remaining workforce in different ratios. Departments where more people were affected
receive higher rate of SIA compared to those departments which were either not affected
or affected slightly.

Fringe Benefits
PTC being a progressive multinational provides many fringe benefits to its employees.
The fringe benefits available to workers of PTC are explained as under:

Pension

In PTC on attainment of 58 years of age for men and 55 years for women or of
completing fifteen years insurable service, one gets eligible for retirement. But he is
given another option as well. If he wants to continue his job, he is awarded 3 extensions
(Each extension each year) for 3 years more.
  Old Age Grant

Old Age Grant is payable in lump-sum at the rate of 50% of the average wages of an
insurable worker for his completed years of service.

Group Insurance

Under this scheme all the employees are insured with ALICO Insurance Company and
also with EFU Insurance Company. Under the former scheme the whole premium is paid
by the company on behalf of the workers. The workers’ heirs are entitled to receive
Rs.20, 000 at the time of worker’s death while he was on the company’s roll. The second
insurance plan EFU is optional. In case of EFU, 75% of the premium is paid by the
company on behalf of the worker while the rest of 25% is contributed by the worker.
Under this scheme the workers are insured against Rs.400, 000/.

Long Term Service Awards

Workers who have continued to maintain their commitment to the organization for long
period of time are given long service awards. Eligibility for this award is completion of
25 years of service. The employees eligible for this reward are given Rs.12000/- each as
their reward for their loyalty with PTC. A special party is arranged for this purpose.
• Hajj Scheme

Each year PTC sends seven workers to Mecca for pilgrimage (Hajj). Six of these
members are from Akora Khattak Factory and one is from Leaf Area. Financial
Assistance of Rs.110, 000 is given to each employee who proceeds on Hajj.
Scholarships

Each year Workers’ Welfare Board grants scholarships to academically talented children
of workers. These scholarships are provided to 24 students on merit basis. Maximum of
Rs.400 are granted to post matriculate students and Rs.500 to post intermediate students.

Bonus

PTC gives two types of bonuses to its permanent employees every year.

• Contractual Bonus
• Profit Bonus

These bonuses are declared in the month of January each year but are paid to workers in
March when the audited accounts of the company are declared along with three months
interest.
 Employee’s motivation
PTC provides the following benefits to its employees to keep them motivated, confident,
up-to-date and to make them better citizens of the community:

• Free Computer Courses

• Dastakari Center
• Farewell
• Housing Schemes
• Factory Mosque
• Sports Activities
• Traveling Facilities
• Uniform and Smoking Allowance
• Burial Expenses
• Retirement Party
• Blood Donation Camp
• Social Security

Exit Procedure

Retirement
There is a limit for an individual to do a job. No individual can work throughout his life.
In PTC the age of compulsory retirement is 58 years for workers and managers, first
extension is given at the age of fifty-five years, second at 56, third at 57, subjected to his
performance and medical fitness. The retirement can also be on medical board
examination/ recommendation basis.
Retirement on medical grounds
Any employee, if becomes medially unfit to perform his job satisfactorily, is referred to
the Medical Board. If the Medical Board finds him medically unfit for the job, he is given
retirement on medical grounds.

Discipline

It is the company policy to ensure that the required standards of performance and conduct
are maintained. PTC respects and abides by the rules given under any Labor Law. For a
minor mistake, a worker may be cautioned or summoned by his supervisors not to repeat
the same mistakes or a written warning is given to him or a fine is imposed on him,
which is in conformity with the law. For a mistake of severe nature, a worker may be
Charge Sheeted under the law. The disciplinary procedure is intended only as a statement
of company policy and management guidelines. It does not form part of the contract of
employment or otherwise have contractual effect. There are four stages to the procedure
for permanent. The company reserves the right to initiate the procedure at any stage or to
jump depending on the seriousness of the conduct/performance.

 Stage 1
Verbal warning (03 months)
 Stage 2
Written warning (06 months)
 Stage 3
Final written warning (12 months)
 Stage 4
Dismissal

Methods of separation

Resignation

If an employee finds a good job offer elsewhere, better working environment, attractive
salary packages, fringe and other benefits or due to any other reason, and if he/she opts
for separation from the organization, it is termed as resignation. It is a right of a worker
but he/she has to inform his employer one month prior to his resignation from the
organization or one month wages/salary is deducted from him if he does not inform.

Voluntary Separation or Golden Handshake

PTC is one of those organizations that keep pace with the changing technological
environment. It has recently replaced its old cigarette making machines with modern
machines, which require less manpower to produce more cigarettes per man hour. In
order to reduce the surplus employees, PTC in year 2001 launched schemes to reduce the
surplus employees, called Voluntary Separation Scheme VSS and Special Separation
Scheme SSS. It may be viewed as Golden Handshake or restructuring of PTC.
Any employee opting for separation under VSS or SSS is paid a specific percentage of
his/her salary and other benefits.

 Up to 5 years 75%
 6 to 8 years 40%
 9 to 10 years 36%
 11 to 15 years 25%
 16 to 20 years 18%
 1 to 25 years 15%

GRIEVANCE AND DISCIPLINARY

PROCEDURE STRUCTURE
 Employee Problem

Immediate Boss

Solution No Solution

HR Department

Solution No Solution

Labor Court

Solution (FINAL
DECISION)

GRIEVANCE AND DISCIPLINARY PROCEDURES

The grievance and disciplinary procedure of PTC is very clear. If an employee in the
organization have some problem with his colleague. He directly reports to his immediate
boss. Immediate boss has to go through this problem and tries to solve the problem
between them. If the employee still faces problem and immediate boss fails to solve it the
employee has the right to report directly to the HR department. HR department goes from
first to last to solve out the problem between the two employees. In this mean time the
employee has to wait because this process takes time. After the process if the employee
feels that the problem is solved he would continue with his work but if he/she is not
satisfied from the decision and still thinks that decision is not properly taken then he is
allowed to go in Labor court. Now the labor court would decide this case. He has to
proceed through a proper channel, if that employee does not go through a proper medium
and he directly reports in the labor court. So his case would be decided against him
within the 2nd hearing.
Similarly the following procedure is observed if employees have problem with their boss
and if the boss has any problem with his/her subordinate he will first give him/her three
warnings. Verbally and in written. After that he his allowed to inform HR Head to solve
the problem.

It is the company policy to ensure that the required standards of performance and conduct
are maintained. The disciplinary procedure is intended only as a statement of company
policy and management guidelines. It does not form part of the contract of employment
or otherwise have contractual effect. There are four stages to the procedure for
permanent. The company reserves the right to initiate the procedure at any stage or to
jump depending on the seriousness of the performance.

Stage 1 Stage 2 Stage 3

Verbal Written Final

warning warning written
[3 months] [6 months] warning
[12
months]

Stage 4
Dismissal

Criteria for Redundancy

In Pakistan Tobacco Company the redundancy criteria is explained to employees very
clearly. PTC tries it’s best not to redundant any employee. It feels that employees are the
greatest resource and are the real strength. If there is a situation where there is a certain
job and people who are performing the job are surplus, then the surplus people have to be
redeployed or terminated from job. The most commonly observed scenario is when there
is a technological change and machine replaces the man there are many employees whose
job is at stake. For example, recently PTC replaced its machinery with the advanced
version which is capable of producing more then the previous one. As this machine
produces more, so workers working previously became redundant. Firstly, PTC tried to
adjust these employees in any other place but even then few of them couldn’t be adjusted.
In this case following are the procedures used to solve the situation.

Attractive packages

Employees are given attractive packages that they are willing to leave the organization
themselves. Such an environment is made for them in which they are tempted to accept
the proposal and get retreat.

Voluntary Separation

Pakistan Tobacco Company launched two schemes as Voluntary Separation Scheme VSS
and Special Separation Scheme SSS in the year 2001 in order to reduce the number of
surplus employees. In this scheme organization gives a good amount to the employees
according to their job duration in the organization.