Science Series Data Report

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Human Resource (HR) Initiatives and their Impact on Performance of National Bank of Pakistan
Naveed Sultan Vice President (Regional Compliance Officer) of National Bank of Pakistan National Bank of Pakistan, Regional Office, Abbottabad, Pakistan. Contact #: +92-300-5647021 E-Mail: naveednbp@yahoo.com

Abdul Wajid Assistant Vice President, National Bank of Pakistan, Branch Manager, Battagram Branch, (K.P.K) Pakistan. Contact #: +92-333-5036955 E-Mail: wajid_786pk@yahoo.com

Abdullah Bin Omar (Corresponding Author) MS Banking & Finance Student Department of Management Sciences COMSATS Institute of Information Technology, Abbottabad, Pakistan Contact #: +92-300-6376466 E-Mail: abo776@hotmail.com

Muhammad Waseem (Supervisor) Assistant Professor, Department of Management Sciences COMSATS Institute of Information Technology, Abbottabad, Pakistan Contact #: +92-3335069485 E-Mail: waseem@ciit.net.pk

Sehrish Rustam MS Banking & Finance Student, Department of Management Sciences, COMSATS Institute of Information Technology, Abbottabad, Pakistan E-Mail: sehrish_rustam@hotmail.com

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Abstract This study discusses about the major Human Resource (HR) initiatives under taken by the National Bank of Pakistan (NBP) and their contribution on Banks overall performance. The main objective of the study is to embark-upon significant HR strategies adopted by NBP that led the Bank to show outclass performance. By virtue of these HR Policies not only the financial health of the Bank has been improved but it has also revitalized, energized & motivated the entire work force of the Bank to take & accept future challenges. Our study will be very helpful for the Banking industry and it will give a new direction to top level Management of Banks & financial institutions including HR consultants. Keywords: Human Resource Initiatives, National Bank of Pakistan, Case Study, Performance, HR Policies 1. History and Introduction National Bank of Pakistan (NBP) was established on Nov 9, 1949 under the NBP ordinance 1949 in order to cope with the crises which were developed after trade deadlock with India and devaluation of Indian rupee in 1949. Initially the bank was established with the objective to extend credit to agriculture sector. The bank was established through promulgation of an ordinance due to the situation that had developed with regard to the financing of jute trade. The bank commenced its operation from 20th November 1949 at (6) important Jute centers in the East Pakistan (now Bangladesh) and directed its resources for the financing of jute crop. The NBP has come a long way since 1949. All was not well with this largest commercial bank of the country. But today there is no looking back as in a short span of ten years since 2001 when Ali Raza took over the bank as President, it recorded spectacular rise in profit apart from other significant contributions making it the leading bank of the country. National bank of Pakistan the largest Bank of the country has completed 61 years service to the nation. In 1949 it started its operations with an issued capital of Rs.15 million and 100 employees only. National bank of Pakistan is one of the pioneer institutions of Islamic Republic of Pakistan. NBP is maintaining its position as Pakistans premier bank determined to set higher standards of achievement. It is a major business partner for the Government of Pakistan with special emphasis on fostering Pakistans economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally and internationally. With strong customer based, large branch network and broad range of financial product and services it is truly leading towards a Nations Bank. It is NBPs privilege that it is providing services to more than 10 millions account holders apart from serving 5 millions pensioners. It is the only bank in public sector owned and controlled by Government of Pakistan (GOP), whose deposits are 100% guaranteed by GOP. No other bank could provide such kind of sovereign guarantee to its depositors. In terms of risk rating of JCR VIS credit rating company, NBP has the highest stand alone short term rating of A+1, while in terms of long terms stability it has AAA rating which is again highest in the banking industry of Pakistan. NBP is the largest commercial bank operating in Pakistan. Its balance sheet size surpasses that of any of the other banks functioning locally. It has moved from being a public sector organization to being a modern commercial bank. As mentioned in the Banker Magazine (owned by the Financial Time Group London) NBP has made a complete turnaround from a loss making domestic bank to one of the most profitable banks in Asia and in the world. The banks services are available to individuals, corporate entities and the government. While it continues to act as a trustee of public funds and as an agent to the State Bank of Pakistan (in places where SBP does not have a presence) it has diversified its business portfolio and is today a major player in the debt and equity market, corporate and investment banking, retail and consumer banking, agriculture financing, treasury services and is showing growing interest in promoting and developing the countrys small and medium enterprises by increasing the capacity to provide SME specific services, while fulfilling its social responsibilities as well. NBP Registered office (Head Office) is situated at I.I Chundrigar Road Karachi. Its network of Branches is scattered throughout the country including Azad Kashmir, Gilgit Baltistan while it has strong presence in all the Districts and Tehsil Headquarters of the four provinces as well as in Federal Capital territory Islamabad. It has highly diversified staff strength of over 16457 experienced talented & motivated people. Administratively there are 28 Regional Offices & 1 Sub Regional office Gilgit linked with Regional office Islamabad. The Regional Offices are manned by Regional Head with five General Managers including G.M Credit, Business, Operation, HR, & Regional Compliance Officer, looking after their respective areas of functional responsibilities. Since early 2001, the bank has been going through a transformation to face the challenges of the 21st century. A number of initiatives have been taken, in terms of institutional restructuring, changes in the field structure, policies and procedures, internal control systems with special emphasis on corporate governance, adoption of capital adequacy standards under Basel II framework, in the up gradation of the Information Technology (IT) infrastructure

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and developing the human resources. A number of projects for the up gradation of the IT infrastructure have been initiated at the bank. It has expanded its ATM network and online connectivity to enhance its outreach to large segments of society as well. 2. Organizational Structure The bank undertook de-layering of the field structure in July 2002, giving more empowerment to the field functionaries and controlling offices. The principal driving factor was to ensure more responsive service to the clients and prompt decision making to avoid any unnecessary delays. The entire layer of controlling offices i.e. zones were eliminated and 29 regions including 1 sub region were setup. This was accompanied by a rationalization program for staff reduction and branch closure. NBP has built an extensive branch network with 1289 branches in Pakistan and 23 overseas branches. It has agency arrangements with more than 3000 correspondent banks worldwide. Its subsidiaries are Taurus Securities Ltd, NBP Exchange Company Ltd, NBP Capital Ltd, NBP Modaraba Management Company Ltd and JSC Bank Almaty, Kazakhstan. The bank has initiated a well defined risk management system. It is aware of the challenges posed by risk management guidelines and Basel II accord and has taken appropriate measures to strengthen the Risk Management structure and practices. A Board level Risk Management Committee has been formed, along with Basel II Gap Analysis Exercise, implementation of Risk Management Software for managing Credit Risk. The bank has set up a separate Risk Review Division to meet the challenges posed by the adoption of the Capital Adequacy standards under the Basel II framework. Additionally, an Operational Risk Management unit was set up to supplement its already established Credit and market Risk units for comprehensive risk management. The bank is equally fulfilling its responsibilities established by the Code of Corporate Governance issued by the Securities & Exchange Commission of Pakistan. It has established and is managing an adequate system of internal control which encompasses the policies, procedures, processes and tasks as approved by the board of directors that facilitate effective and efficient operations. The Internal Control System ensures quality of external and internal reporting, maintenance of proper records and processes, compliance with applicable laws and regulations and internal policies with respect to conduct of business. The management also ensures that control procedures and policies are amended from time to time as and whenever required. 3. Bank Areas of Operations The Banks services are available to individuals, corporate entities and the government institutions. The Banks focus is on seeking out new customers, with emphasis on service standards and better management of its business. It has implemented special credit schemes for Small and Medium Enterprises, agriculture finance, business and industries, Qarz-e-Hasna loans to students, self employment scheme for unemployed youth as well a public transport scheme and export finance schemes. The bank has expanded its range of products and services to include Shariah-compliant Islamic Banking products and has actively participated in various Sukuk transactions. For the promotion of literature, NBP recently initiated the Annual Awards for Excellence in Literature. NBP confers annual awards to the best books in Urdu and in all prominent regional languages published during the defined period. Patronage from NBP will no doubt help creative work in the field of literature. The bank also is the largest sponsor of sports in Pakistan. It has provided generously to philanthropic causes whenever the need arose. It has taken various measures to facilitate overseas Pakistanis to send their remittances through e-remittances in a convenient and efficient manner. In 2002, NBP signed an agreement with Western Union for expanding the base for documented remittances. More recently it has started its Electronic Home Remittances projects like express money transfer, SAMBA, and E-remittance facility. This project is a technology based system to handle inward remittances efficiently, by ensuring that the banks branches keep a track of the remittance received from abroad till its final receipt. 4. Issues & Problems (Pre-Implementation Scenario) In year 2001, the banking industry was undergoing phenomenal changes globally with massive growth in operations on account of market driven opportunities, massive expansion in global trade, mega level mergers and acquisitions and technological developments. Correspondingly, the challenges for all banks operating in national and international environment have increased manifold due to competition for business, increasing demands for financial derivatives and increased sensitivity of customers for speedy financial transactions in Pakistan. Banks today need to compete and meet the challenges by introducing innovative financial products and services, automation in their banking operations and personalized customer care. Traditional banking patterns of providing rudimentary banking services are a thing of the past. In such a competitive environment only such banking institutions can survive and grow who fulfill the expectations of the customers. The primary factor was to meet the increasing challenge of the competition between banks and to gain a competitive edge through strengthening a skilled and talented human resource base.

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NBP being the premier financial institution of Pakistan has a degree of competitive advantage due to its highly committed human resource, strong product base & wide network of branches throughout the country. However, simple commitment is not enough to meet the ever increasing challenges of the future. Continuous efforts need to be made to enhance the knowledge and skill level of employees in order to develop a decisive and sustainable competitive edge through human resource development. Today NBP has shown the highest ever profitability and enjoys the best credit ratings. It has the largest asset base with highest return on capital. This was not the position 10 to 11 years before. In order to understand the underlying factors responsible for this achievement, the historical perspective needs to be explored. NBP witnessed a management change in the year 2000 when Syed Ali Raza, an experienced banker of international repute was appointed as the CEO of the bank. At that time when Syed Ali Raza took charge of NBP the domestic operations were at a loss. The external regulators had expressed serious concerns regarding the operations of the bank which involved a bureaucratic approach resulting in inefficiency, delays in customer service, de motivated employees, favoritism and outside interference all of which were grossly affecting the work ethos. It was under these conditions that the president took the bold steps of reorganizing the banks structure and declaring the improvement in the quality of human resource in a top priority. The reorganization of the banks structure involved the complete elimination of one tier with a decentralized decision making process based on a functional matrix through empowerment of field functionaries. With regards to the up-gradation of human resource, the bank is most fortunate as Top Management and the Board of Directors have been extremely supportive of the career growth of employees. Skill development and talent management have been particularly encouraged with an emphasis on team building at all levels. More than anything else, this has been the highest contributing factor in the turnaround, business growth and record profitability of the bank in respect to human resources. In Appendix, Table #4 contains the performance indicators that clearly show the position of a sinking bank in the year 2001. The financial highlights given in Table #4 of the Appendix shows a dismal picture of the state of affairs of NBP in the year 2001. The total asset size was Rs. 415 (Billion) and its deposits were Rs. 350 (Billion). The net profit after tax was Rs. 1 (Billion), while the EPS was shrank to Rs. 0.85 only. It was feared at that time, if drastic changes were not made the National Bank may go into losses in the next years that may come in the history of the bank. Despite a lot of short comings which a Bank like NBP was facing in year 2001, what were the key factors which contributed toward the achievement of Marvelous Results? From a journey started in the year 1949 heading to year 2010 apart from others the main factor which contributed its success is the Better Human Resource Management. Being the oldest Bank of Pakistan incorporated in 1949 the people working in the NBP were comparatively less educated, lack of computer literacy, disorganized, lethargic, de-motivated, poorly managed, untrained, poor compensation package and lack of technical and conceptual skills a part from having no specialized business education due to very limited educational opportunities. The other drawback, that NBP was recognized & considered as a Government Department. The people working in the bank have a strong perception to be a Government employee and every one have a fair chance to take benefit of performance without working efficiently. There was no concept of pay for performance at that time. Each one whether has worked or not was getting equal benefits & rewards. The people working in the bank were over a number of years were trained to use old ledgers & books manually in order to maintain & record banking transactions. Even during the past few decades calculators were not in use. Lately the computers were introduced in every sphere of business including banking industry. However due to lack of behavioral change, lack of willingness to adapt & learn the new technology the people working in the branches were still not in a position to make effective use of these computer machines. The top management of NBP recognized that Information Technology and Human Resource Management are two major shortcomings of the bank. However we will restrict and focus our areas of studies to the aspects of Human Resource Management only. 5. A Time to Change In todays competitive business environment, NBP has redefined its role and has shed the public sector bank image, in favor of a more modern commercial bank image. It has off-loaded 23.2 percent shares in the stock market, and while it has not been completely privatized like the three other public sector banks, partial privatization has taken place. It is now listed on all the domestic stock exchanges of Pakistan. Today NBP is a progressive, efficient, and a customer focused institution. It has developed a wide range of consumer products, to enhance business and to cater the needs of the different segments of society. Some schemes have been specifically designed for the low and middle income segments of the population. 6. NBP HR Mission Statement Keeping in view of the above, first of all the bank redefined its HR mission statement which is given below.

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To provide more talented human resource in relation to competition in all NBP functional areas create a motivating environment and maintain industry harmony. The key elements strengthening the HR base of the bank includes: Provision of talented human resource. Employee motivation. Industrial harmony.

Additionally, all HR initiatives implemented at NBP are in the line with above objectives. 7. Initiatives Undertaken By NBP NBP realized the importance of up-grading the quality of human resources to meet the challenge of competition. It developed a strategic focus to motivate the employees for higher performance and maintain industrial harmony. An internal survey was conducted to enable the bank employees to identify the top challenges being faced by the bank. The employees, mostly field functionaries, identified Technology and Skilled Manpower as the top two challenges being faced by the bank in its internal operations. The challenge of the lack of skilled manpower directly reflected on the status of the HR base of the Bank. The lack of skilled human resource posted a complex problem as the bank had already implemented a voluntary handshake scheme in 1997 due to which many experienced bankers had separated from the bank. The voluntary handshake of 2001 multiplied the effect and after the implementation of these two separation schemes, the workforce was practically reduced to half. Both the schemes were implemented under the condition imposed by Government of Pakistan and the World Bank that fresh hiring would not be done in the future. Against this backdrop, the HRM & Administration Group at the Head Office developed strategic HR Plans to implement the vision of the then president of transforming the organization and making it the Bank of Choice for customers, employees and other stakeholders. The HRM & Administration Group set forth as its guiding principle of being a strategic business partner of the bank and building a binding relationship between its objectives and the overall mission of the Bank. The implementation of strategic HR Plans started from the year 2002 with the initiation of developing skill inventory of bank employees, identifying key and critical positions within the bank and placement plan. The emerging fields of banking also required postings of personnel with necessary skills and professional qualifications. Planned separations of VHS-2001 and annual attrition rate were taken into account for filling the skill gap. In line with the mission statement of the HRM & Administration Group, various initiatives have been taken which have contributed significantly in the turnaround of the bank and record breaking performance over the last few years through employee empowerment and motivation. The bank has taken a number of HR initiatives to develop its workforce. Today banks have to survive in a highly competitive environment, where the demand for banking services is highly diversified and growing and changing rapidly. To meet the competitive challenges, NBP felt that it had to enhance the knowledge and skill level of its employees so as to gain a sustainable edge over the other banks. Importance was placed on upgrading the quality of human resource for higher and better performance and to meet the demand of growing competition. Not only employees were provided with job related training to develop a talented human resource base, but qualified management trainees have been inducted, professionals have been hired to fill the skill gap, a talent pool has been created by identifying talented employees from within the bank throughout the country and placing them in important positions in all functional areas of the bank. All this was done with one purpose to develop a talented human resource base at the bank. In addition, the bank has gone a step further and has made concerted efforts to reduce the gender gap. In the last four to five years, a change has been witnessed in the employment pattern, where more women have been employed at responsible managerial positions, like those of female branch managers and female operations managers. While recruiting and selecting Management Trainee Officers, the bank management ensures that young and qualified females are offered equal employment opportunity. We are discussing some of Human Resource initiatives undertaken by the HR department of NBP which certainly contributed for the achievements of the organizational objectives. 7.1 Management Trainee Officers (MTO) The recruitment in the permanent cadre of the bank was kept in abeyance since 1995 and there was no induction in the bank for nearly a decade in this category. To fill the skill gap the bank management obtained special permission from Govt. of Pakistan in year 2001 for restricted recruitment in the permanent cadre on an annual basis till 2010. In order to improve the quality of Human Resources, Management trainee Officers (MTO) scheme was introduced in the year 2001 with the approval of Board of directors. Approximately 100 MTO(s) are inducted every year on merit in a transparent manner. About 1200 management trainees have been inducted till the end of 2010.

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After a vigorous scholastic and on the job training, the management trainee officers are placed at responsible position in high value branches all over the country. Their contribution in furtherance of culture change, infusion of contemporary work practices and overall growth in banks performance is noteworthy. The Management Trainee Officers have been placed in the fields of General Banking, HR, Compliance, Risk Management, Treasury, IT and Audit. So far the bank has placed these MTOs on key positions, 300 Branches Managers, 150 Branch Operation Manager, 125 Incharge General Banking, 200 Incharge Credit, 100 Incharge Foreign Exchange, 125 Incharge Credit Administration, 96 in HR and 104 in IT. These MTO(s) are holding first class Master Degrees in Banking, Finance, Marketing, HR, Information Technology, and Agriculture etc from reputed University(s). In order to avoid favoritism and nepotism the selection has been outsourced through Institute of Bankers Pakistan (IBP). The selection process consists of a series of Test, written examinations Group discussions & personal interview by a Board of highly experienced & educated panels of Banks professionals. The induction of MTO(s), purely on a merit based process of selection is an example set by NBP which is/was hardly done in any state organizations in Pakistan. Periodically MTO(s) positions are advertised through leading news papers. With a view to encourage the fresh recruits, MTO(s) to become an effective professional(s) of banking industry , 30 weeks training in three phases is imparted immediately on joining the NBP family. This helps the MTO(s) to develop leadership skills, professional acumen to undertake responsibility in all functional areas of Branch Banking effectively and efficiently. In 1st Phase six weeks training to MTO(s) is given at IBP about Commercial aspects of banking related laws & regulatory Compliance. In 2nd Phase MTO(s) are under gone training of six weeks at NBP Staff Colleges where they learn about organizational dynamics, products, services & related Branch Operations. They are given hands on training on Banks systems procedure & practices in a highly interactive session. In 3rd Phase eighteen weeks Practical on the Job training is provided to MTO(s) by working practically in the Branches. Under supervised environment, after completion of training period submission of a project report on approved topic is a prerequisite of successful completion of course. All MTO(s) are initially recruited as officer grade II and after completion of probation period of one year they are made confirmed and permanent employees of the bank. The pay and salary structure of these MTO(s) is kept different from the existing salary structure within the organization. The placement of MTO(s) is being carried out in a systematic and scientific manner by the HRM wing Head office Karachi, while at regional level the placement of MTO(s) is considered for leading positions including Mangers, Operation Manger, Credit Officer, Risk Manager, IT Manager Audit and Compliance. The promotion of all MTO(s) is considered on Fast Track System. Accelerated initial career progression based on performance, includes promotion as officer Grade I, after first three years subject to excellent performance appraisal reports for three years and IBP Part-I or (Stage I & II) and then as Assistant Vice President after next three year of service subject to DAIBP part-II or (Stage III). Being pioneer of the concept, the Management Trainee Scheme of the bank has thus proved highly successful and is being emulated by other financial institutions in the country as well. 7.2 Talent Pool Scheme-Talent Management NBP talent management philosophy involved in making sure that every employee is provided with the guidance and support to achieve their full potential. Every one has the talent and managing talent with tasks produces competitive advantage. The talent management enables the banks managers to engage and motivate employees throughout the organization. Talent management is used by the NBP in selection of Regional Management Teams as well. NBP management considers Talent as a combination of sharp strategic mind, leadership quality, emotional maturity, communication skills and the ability to attract and inspire other talented people and ability to declare results. It is a critical driver of corporate performance and organizational ability to attract and retain talent is major competitive advantage in future. There was realization by the banks management that there are many existing employees within the bank who had the necessary qualifications, experience, skill and talent but due to one reason or the other, their career growth had become stunted. Such employees were dispersed throughout the country and were required to be identified for proper placement. In line with the global corporate strategy of leading fortune 500 Companies that the best people should be placed in responsible and key positions, the implementation of the NBP Talent Pool scheme has proved to be a pioneering efforts in this direction in the Pakistan banking industry. Consequently, in the first phase over 200 employees were identified on merit through written test and interview for selection in NBP Talent Pool scheme and posted in positions of higher responsibility. The 2nd phase of selection of 200 employees has been completed while

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the implementation of 3rd phase is in process and it is envisaged that another batch of about 300 existing bank employees will be available under the scheme for placements in high value branches of the bank. The Talent Pool Scheme was introduced in NBP in the year 2005. This talent pool is being utilized for various leadership positions in the organization such as Branch Managers, Regional Management teams, Head office etc. Under this scheme as all existing employees working in the organization having a minimum qualification of postgraduation were given an opportunity to go through a process of selection in talent pool scheme. A series of Test (Psychological, Academics, and Personality) / interviews were conducted to identify the talented people within the organization. So far 2517 employees applied in talent pool scheme till year 2010. Out of which 717 employees were selected. The percentage of employees selected is around 28%. After selection an increase of 10% in basic pay was given to the employee(s) who qualified the selection criteria. After selection of staff in talent pool scheme the Head Office monitor their performance on monthly basis as well. Further more Talent Pool is considered an effective tool for attracting, developing and retaining good quality human resources in NBP. The other objectives which were achieved by the introduction of talent pool scheme with in the NBP are given here under: i Increasing high morale and productivity. ii Development of database of Key performers. iii Selection of People for top position out of Talent Pool. iv Enhancement of loyalty and performance of people. v Improvement in job enrichment and satisfaction. vi Increase of Importance and motivation level. vii Promotion of healthy competitions amongst the employees. viii Talent Pool a criteria considered for next promotion. ix Identification of right person for the right job. x Talent Pool a tool for identification of staff potential and caliber. xi Talent Pool helps in succession planning. The management of the NBP is offering a preferential treatment to those selected in Talent Pool Scheme at the time of promotion as well as in foreign postings. 7.3 Pay for Performance NBP has realized the importance of HRM functions much earlier in the year 2001. In times of high competition in the Banking Industry the most critical factor of success is recognized as strengthening of HRM in the organization. In NBP, HRM is moving from a purely administrative function to a proactive & professional HRM function. Creating a high performance culture in the organization is done through developing job description for all key positions and introducing the new appraisal system in the organization. Making efforts to bring the culture of pay for performance that is differentiated pay increases for performance, institutionalizing the merit and reward culture. Performance Appraisal System has been revised to replace traditional subjective Annual Confidential Report (ACR) system to provide more objectivity in evaluation & recognizing merit. This system was implemented from January 2007 for all executives & contractual employees. Subsequently performance appraisal system was made applicable to all over 9200 regular employees, who are in officer category with effect from 1st Jan, 2009. Under this system job objectives of each one of employee are developed by his superiors on the first day of start of Financial Year. Then targets are selected and agreed upon mutually in between subordinates and superiors. After a detailed deliberation between employee & his superior the documents is signed by both of them as a token of acceptance of annual job objectives. At a regular interval the performance of employee on the job is monitored in order to ascertain the level of achievements. On 31st December every year the employee himself assigns the rating by writing his own performance appraisal sheet. Keeping in view the percentage level of achievements, all the performance objective are divided into (15) key objectives out of which 5 are financial & 10 are non financial objectives. The 70% weightage i.e. 3.5 points is given to achievement of 5 financial objectives while 30% weightage i.e. 1.5 points are given to 10 non financial objectives. In this way the assessment of employee individual performance is evaluated in numerical terms at Likert point scale of 5. The detail about it is given in Table # 7.3 (a) in Appendix. Accordingly on the basis of scores, individual employees performance is ranked in terms of numeric A, B, C, D, E and consequently the Annual Increase in Pay is allowed to the employees in the differentiated percentage in numbers which were shown in Table # 7.3 (b). In this way the concept of pay for performance is promoted with in the organization. Each one of the employees tries his level best to perform and achieve the mutually set objectives which were agreed at the start of the year. On the basis of annual performance appraisal in order to motivate top performers an achievement award is given to 10% top performers every year in the form of cash and certificates.

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7.4 Female Branch Managers-Women Empowerment The demographics of Pakistan are slightly skewed reflecting a higher female population which to a great extent is under utilized and their contribution to the economic sectors of the country is thus less than the optimum level. Currently there is very high scope of inducting this female population in economic activities as many of them are academically qualified to take up challenging job opportunities. In line with the Governments policy and vision of the banks president, NBP implemented a plan to empower the existing female employees of the bank and post them as Mangers in 10% of the banks branches. In this way the talented female employees were given an opportunity to take up the challenging assignment of managing specified NBP braches as Branch Mangers. Around 35 female Branch Managers were selected from the existing female workforce of the bank while 30 others were recruited from external sources. These 65 female Mangers have been posted as Branch Manager at Branches of all the 29 Regions after intensive training and initial performance results indicated that they have shown remarkable performance. The bank undertook the initiative for placement of female branch manager in the year of 2005. National bank is endeavoring to provide equal employment opportunities to male and female members of the society. The men and women are given equal importance as far as their recruitment in NBP is concerned. No doubt the men and women are being inducted in NBP through MTO scheme without any gender biases. The male and female MTO(s) selected are equally treated and given appropriate trainings to takeover the future job responsibilities. Out of every hundred MTO(s) selected it is experienced that 15% selected are the females. In order to achieve the organizational objective of placement of female Branch Manager, a comprehensive strategy has evolved in this respect. According to which a numbers of female employees which were already working in NBP were considered in first phase. In order to identify and select 10% female Managers, the bank through internal advertisement finds out the potential female officers who are ready to takeover the job responsibilities of a Branch Manager. Through screening test / interview the female Mangers were selected and then they were provided on the job training, and after successful training they were posted as Branch Manager at different branches. These female managers were given an incentive of one step promotion in case of taking over as a Branch Manager. Likewise through external advertisement a complete batch of hundred female MTO(s) was recruited under Management Trainee Scheme in the year 2009. After undergoing 30 weeks comprehensive training in three phases the intending MTO(s) are selected for placement of managerial positions. The statistics shows that out of total 16,457 employees of the bank a total number of 1514 employees are women while out of this 54 are performing as Branch Managers at different branches through-out the country. The statistics shows that in branches where the female mangers are working has shown encouraging results in terms of profitability, advances and deposits of the bank. In 90% percent branches profit has increased by an average of 150 percent. In 85% of branches advances have grown up by an average of 200 percent. In 80% of branches deposits have gone up by an average of 60 percent. 7.5 Enhancing Employee Motivation NBP is utilizing effectively all the behavioral as well as scientific management theories in order to motivate its employees to achieve the organizational objectives. The management fully recognizes that the human motives are based on conscious and subconscious needs required to be fulfilled in individualistic, hierarchical order. Generally, motivation includes the entire class of drives, desires, needs and wishes, all of which are different for different individuals and further differ in their importance at various times for the same individual. No doubt managing employees motivation is always an extremely complex task but management of NBP has always taken a challenge to tap the employees potential in the right direction. In order to maintain employee satisfaction and high motivation level the NBP has utilized all HRM tools for enhancing employees motivation thereby, contributing to the banks record growth. A number of lucrative facilities are being offered to the employees that has contributed a lot in motivation of employees , a few of which are given below: 7.5.1 Lucrative Compensation Salary Package: Employee compensation Pay package 2004, 2006, 2008 and 2010 were negotiated and implemented to the complete satisfaction of the employees and in the best interest of the bank. This was a major accomplishment in view of the highly charged intra-union and inter-union rivalries compounded by the transition of HR responsibilities. During last five years increase in pay was 100% for almost all NBP employees. NBP is providing lucrative salary packages to all the employees working in the organization. This includes Basic pay, House Rent Allowance, utility allowance, medical Allowance etc .Based on performance appraisals increase in salary is given from 7% to 20% and in exceptional cases up to 30%. In order to avoid tension of fluctuation of prices of petrol, a Petrol Ceiling in liters is allowed to each category of employees ranging from 100 liters to 350 liters per month.

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7.5.2 Medical and Health care: NBP is providing full range of Medical and Health Care facilities to all employees, spouses, children as well as their dependant parents. This includes Hospitalization, Consultation Ceilings; Medicines for prolong illness and payment of Cost of medicines with monthly salary. 7.5.3 Special Job oriented perks: RMT Post Allowance: This allowance is paid to the members of Regional Management Team (RMT) which is 20% of the basic pay per month paid with salary. Apart from this each member of RMT is allowed 1000cultus car with 150 liter petrol per month for performance of official duties. A mobile phone with Rs.2300/- per month is also allowed to members of RMT. Teaching Allowance: The officers and executives performing their duties at staff colleges are paid extra 20% of the basic pay per month as Teaching Allowance. Key Allowance: Officers up to Grade-I are allowed Rs.500/ - per month as a Key Allowance to those who are holding Keys of strong rooms. Entertainment Allowance: This allowance is allowed to the Managers of the Branches, For Category I, Rs.1000/- per month, for Category II, Rs.2000/- per month, for Category III Rs.3000/- per month while big Branch Managers of Main Branch Lahore, Karachi, Islamabad, Rawalpindi & WAPDA House Branch this allowance is Rs.4000/per month. Education allowance: All employees are allowed up to maximum of Rs.5000/ per month on account of children studying in schools, while promising children of the employees a stipend at the rate of Rs.2000/-per month up to Metric and Rs.5000/- up to College and University is paid. Marriage grant: Bank is paying marriage grant to the employees own wedding (one in whole career) and wedding of one children at the rate of Rs.80,000/Maternity Charges: Bank is Paying Rs.20,000/- for delivery at home or at hospital up to maximum of three issues. Funeral Expenses: These expenses are paid to the wife /legal heirs of the deceased employee at the rate of Rs.35,000/- on death of each employee. Unattractive area Allowance: An allowance at the rate of 20% of the basic pay per month is paid to all employees performing their duties in unattractive areas as notified by the bank. Hill Allowance: An allowance of Rs.1750/- per month to officers and executives while Rs.2500/- per month to clerical /non clerical employees is paid to employees performing duties at a height of 5500 feet above the sea level. Severe winter allowance: A sum of Rs.1500/- officer/executives and Rs.1400/- per month to clerical /non clerical is paid for 6 months from November to April. Discomfort allowance: An allowance of Rs.250/- per month is paid to employees performing their duties in strong rooms where flow of fresh air is not possible. Disturbance allowance: The bank is paying 30% of the basic pay per month to employees transferred to remote areas of Azad Kashmir/Gawader and Gilgit Baltistan. House Building Finance: It is allowed up to 110 basics salary to employees after 5 years continuous service up to Rs.9,00,000/- markup free, while above said limit just 3% p.a. mark up is applicable on reducing balance. Motor Cycle/Motor Car finance: Motor cycle: Clerical /non clerical Up to Rs.80,000/Motor Car 1000 cc: Clerical/non clerical Up to 90% Cost of Vehicle, Motor car 1300 cc- Executives Up to 90% Cost of Vehicle, These facilities are repayable in 10 years at subsidized rates. free of markup. 4% p.a. markup. 4% p.a. markup.

7.5.4 Family Allowances:

7.5.5 Forbearance Incentives:

7.5.6 Loans and Advances at subsidized rates:

Computer /laptop: Computer finance is provided to all officers and executives up to Rs.100,000/- free of markup repayable in 5 year. Laptop is provided to regular Senior Vice President (SVP) and above and contractual Assistant Vice President (AVP) and above up to Rs.100,000/- free of markup repayable in 3 year.

7.5.7 Risk Coverage:

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Group insurance coverage: Insurance against death and accidents is provided to all regular and confirmed employees of the bank. The cost of premium is borne by the bank. Detail about insurance coverage with respect to employee categories is given in Appendix, Table # 7.5.7 Insurance against House Building Finance: On the death of employee all loans outstanding against the employee are extinguished as the insurance company repays the entire outstanding loan amount to the bank. The cost of premium of insurance of loan is borne by the bank on behalf of each employee.

7.5.8 Special Perks and Privileges: House furnishing limits: The executive(s) are allowed a House furnishing limits once in every 5 year starting from 125,000/- to Rs.350,000/-. Social networking: The executives of the Bank SVP and above are entitled for club memberships in their cities. These executives are entitled for membership of fitness club as well. The fee and charges are borne by the bank on behalf of these executives.

7.5.9 Post retirement Benefits: Pension at the rate of 50% of the running Basics Pay with facility of 50% commutation is available. Payment of Gratuity, provident fund: The bank is paying gratuity at the rate of one month basic pay for each numbers of years of completed service to all the regular employees of the bank. A self contributory facility of provident fund is available to all employees of the bank at which interest / profit is paid at the rate of 20% per annum. A finance facility up to 90% of the fund amount is also available to all the employees. During the last five years 98% of the employees of the bank have been promoted at least once while, 45% of this total strength has received two promotions in last ten years. This is a major step towards ensuring employees motivation and high morale. Promotions of employees: The employees who perform well are promoted every year strictly on merit basis and in a most transparent manner. Such promotions have been made a regular feature so that high performing employees are rewarded and their efforts in the growth of the bank are recognized. 7.5.11 Liberal Payouts of Profit Bonuses: NBP is paying liberal profit bonuses to all regular and contractual employees on annual basis in order to have a sense of participation amongst the employees. Besides the favorable packages, staff loans benefits have been improved through enhanced financing limits and reduction in markup. Pensioner benefits were enhanced to retired employees and pensions were paid to former employees widows to emphasize the banks tradition of employee care. To ensure compensation levels of bank employees in relation to the market, salary surveys have been conducted and salary adjustments are made wherever required. All these incentives have increased the motivation level of the employees and consequently performance of the bank has been improved considerably. 7.6 Other Effective HR Initiatives i. ii. Spot cash award from Rs.5000/- to Rs.20000/- is given for immediate recognition of any excellent individual performance. Facilitation to employees to undertake Diplomaed Associate Institute of Bankers Pakistan (DAIBP) programs and payment of cash awards on passing Stage I, II & III is mentioned in Table # 7.6 (ii) in Appendix section. Cash award to Hafiz-a-Quran Rs.75,000/- is paid to the employees. For improvement of educational qualification, MBA, MCS, MIT, M.COM, PhD etc cash awards are given to the employees. Initiations of president dialogue session to improve organizational communication Bottom Up / Top Down once in every six months. Formulation of policies with regard to employment of children of employees in case of occupational death and disabled person. Generous increase in pension of retired employees creating goodwill and improving image of the bank in society. Timely announcement of Pay increases, profit bonuses and promotions.

7.5.10 Promotions & Career Progression:

iii. iv. v. vi. vii. viii.

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ix. x. xi.

xii. xiii. xiv. xv. xvi. xvii. xviii. xix. xx.

Conducting Employees Communication Programs on last Friday of every month at regional level. Imparting computer literacy training to the employees on the basis of Training Need Assessment (TNA). Introducing HR news letter NBP News line bi-monthly basis and Management Brief on monthly basis and NBP Industry News Letter and holding of HR conferences and industrial relation conferences. Conducting climate surveys to ascertain the level of employee commitment, motivation, task orientation and skill development. Job rotation with minimum dislocation ensuring that no employee feel victimized. Preparation of HR policies and procedural manual, manual on medical facilities and staff benefits and employee orientation manual for new inductees. Empowerment of general managers to enhance managerial functions and effectiveness. Salary adjustments after an extensive and comprehensive market survey. Induction of 3000 temporary and foundation staff in regular cadre of bank to motivate the employees. Payment of two statutory bonuses and one profit bonus to all permanent and contractual employees every year. Birthday greetings, sports and cultural activities are some of the other ways adopted to improve the motivation of the employees. Employee of the year and Employee of the month award to one of the best employee every year and every month in all the 29 regions of the bank. 8. Benefits Arising Out In Result of HR Initiatives (POST- IMPLEMENTATION EFFECTS)

8.1 Financial Achievements The banks financial performance has been remarkable during the last ten years. In year 2010, total assets were over Rs.1.035 Trillion, while deposits grew to Rs.832 billion. Pre-tax profit rose to Rs.24.415 billion. Earnings per share jumped to Rs.13.05 in 2010. The increase in profit was achieved through strong growth in core banking income. Advances increased to Rs.477.506 billion. The bank maintains a sound loan portfolio diversified in nature to counter the risk of credit concentration. It ranges from providing micro credit to the un-banked market segment, loans issued to small and medium enterprises, large corporate customers as well as agriculture loans. The fee based income was Rs.60.9 billion that was on account of higher trade finance and general banking income. The after tax profit of the bank remained at the level of Rs.17.6 Billion. Pretax return on equity stood at 25.4%, while cost to income ratio is at 0.43%. The capital adequacy ratio remained strong at 16.9% with core Tier 1 Capital ratio at 13.8% in year 2010. The detail of financial highlights of year 2010 is given in Table # 8.1 of Appendix. The performance in the year 2001 shows that total assets of NBP were Rs.415 billion while deposits were Rs. 350 billion. The Shareholder equity was Rs. 12 billion while advances were Rs. 170 billion. After Tax profit of Bank was Rs.1 billion while its earning per share (EPS) was Rs.0.85. It is observed from the above data that in last 10 years NBP has become the first financial institution of the country to surpass the One Trillion Rupee Mark. Total assets of the Bank has crossed Rs.1.035 Trillion and bank earned a net profit of Rs.17 billion in the year end 2010 an appreciable growth in a challenging economic environment has been witnessed. Likewise the bank has made remarkable achievements in Deposit/ Advances/ Equity and earning per share. 8.2 Non Financial Benefits NBP has become an employer of the choice. Young educated and professionally qualified youth of universities and colleges prefer to join NBP to make their career in banking. The Annual Attrition rate has been drastically reduced and is around less than one percent per annum. The quality of service delivery has been improved a lot. Number of customer complaints has been reduced to the lowest minimum level. The image and reputation of the bank has been improved considerably. The attitude and the behavior of the employees have been changed and now it is more professional than before. People working in NBP are more satisfied; therefore quality of service has increased the level of satisfaction of customers.

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Improved and cordial relationship exists between the Collective Bargaining Agent (CBA) and the employer (NBP). No labor unrest resulted in the past ten years due to best HR policies and practices. Instances of fraud forgeries and ethical breaches have been reduced to the lowest minimum level. The concept of organizational citizenship prevails amongst all the employees working in the organization.

8.3 Awards & Recognitions National Bank has earned a lot of recognition and numerous awards nationally and internationally. It has received the highest credit rating in the banking sector. JCR-VIS awarded the highest standalone credit rating of AAA/A 1+ to NBP. It has been the recipient of The Bank of the Year 2001, 2002, 2004 & 2005 Award by the Banker Magazine. The best Foreign Exchange Bank of Pakistan for 2004, 2005, 2006, 2007 , 2008 & 2009 (Global Finance), Best Emerging Market Bank from Pakistan for the year 2005, (Global Finance), Best Return on Capital amongst all banks in Asia, 2006 & 2007, (the Banker Magazine) and Kissan Time Awards -2005 for NBPs services in the agriculture field. It is listed amongst the Regions largest banks and also amongst the largest banks in South Asia 2005, (The Asian Banker). It has also been presented with a Recognition Award in 2004 for having a gender sensitive management by WEBCOP AASHA. The bank has grown to the level of largest lender of Agriculture, industries including banking sector of Pakistan. NBP has out performed all the banks in Pakistan according to the recently announced TOP World Banks 2010 (by The Banker Magazine of UK). Every year the Banker Magazine published the list of TOP 1000 banks based on strength, size, soundness, profit and performance. NBP based on Tier-1 capital strength has been awarded as top bank in Pakistan. Amongst the global leading banks, NBP is the only bank in Pakistan that has made to the list of top 500 banks of the world and went on to become the first ever bank of the country to cross the One Trillion Rupee bench mark. 9. Conclusion The steps taken for the strengthening of the HR base in NBP have been instrumental in achieving record performance. This has been empirically proved through Key Performance Indicators (KPIs) received from the field. Nevertheless, to remain competitive NBP management is not complacent and always trying adequately to prepare Human Resource for meeting the challenges of competition in the future. In a goal setting meeting of strategic policy committee held in December 2010 a complete road map has been prepared for the year 2011. The goals and objectives for the year 2011 were firmed up with a view to identifying the right kind of people, socializing them in the right direction, training them, assigning tasks and roles that bring out their best, motivating them to put extra effort and creating conditions whereby the employees have a sense of fulfillment. This highly motivated effort will serve to retain NBPs position as the Employer of Choice. NBP perspective is An organization is nothing without its people. As an employer of Pakistans most efficient and motivated workforce, NBP is committed for the development and betterment of its employees a part from other organizational objectives. It is the National bank which truly gives value to its staff and consequently in return they are playing a vital role in successful running of the bank. 10. References
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Audited Accounts for the Year 2001 and 2010. NBP website www.nbp.com.pk NBP News Line 2010. Dawn Newspaper, 7 Oct 2008 HR Policy Initiatives from 2001 2010 NBP Instructions Circulars (HRM & AG) 2001 2010 NBP Act 1949 NBP Industry News Letter (TRACKER). Bi-monthly Economic Bulletin (November December, 2010) NBP Newsline (January, February 2011) and (July/August 2010). NBP Annual HR Conference 2006 NBP HR Goals for 2008 NBP HR Convention 2005 Existing Medical Benefits Booklet NBP Officers Orientation Booklet

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11. Appendix Table # 4 Items Total Assets Deposits Advances Investments Shareholders Equity Income Expenditure Profit / (Loss) B.T Profit / (Loss) A.T Earnings per share No. of Employees Number of Branches (Rs in Billion) 2001 415 350 170 72 12 36 33 3 1 0.85 15163 1245

The financial highlights of NBP in year 2001

Table # 7.3 (a) Point Less than 3 3 3.1 3.5 3.51 4 4.1 5 Assessment Poor Average Good Very Good Excellent Grade E D C B A

Performance assessment of individual employee in numerical terms at Likert point scale of 5

Table # 7.3 (b) Excellent Good Average Poor A C D E 17% 15% 12% 7% 5% Very Good B

Individual employees performance ranked in terms of numeric A, B, C, D and E

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Table # 7.5.7 GRADE Clerical Non-clerical Up-to Officer OG1 AVP VP SVP EVP SEVP Insurance Amount (Rs) 500,000/1000,000/1,500,000 2,000,000 2,500,000 5,000,000 5,000,000 10,000,000

Insurance against death and accidents provided to employees of the NBP.

Table # 7.6 (ii) Attempts 1st 2

nd rd

Stage 1 (Rs) 50,000 30,000 10,000

Stage 2 (Rs) 75,000 50,000 15,000

Stage 3 (Rs) 100,000 75,000 25,000

Cash awards on passing DAIBP Examination Table # 8.1 (Rs in Billion) Items Total Assets Deposits Advances Investments Shareholders Equity
(including Surplus on Revaluation)

2010 1035.024 832.151 477.506 301.323 128.495 50.884 26.469 24.415 17.563 13.05 16457 1289

Income Expenditure Profit / (Loss) B.T Profit / (Loss) A.T Earnings per share No. of Employees Number of Branches

The financial highlights of NBP year 2010

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