National Bank of Pakistan

We start with the name of Allah, the most beneficent, the most merciful. We thank Him for giving us the strength and resources to complete this task as He gives all. We would like to thank Mr. Jamil Akhtar (AVP Logistics Wing) who kindly referred us to different departments. We would also like to thank all the staff members of the National Bank of Pakistan (Head office), who gave us some of their valuable time to answer all the questions we had regarding their job and working of the HR department and also for providing us with such accurate knowledge of their system especially Mr.Mohib-ur-Rehman (Manager Employee Communication).

We would also like to thank our teacher and guide, Mam Amber Raza for giving us the research topics as our final term report, which gave us the opportunity to move forward and explore the real world scenarios and the working of the system in the public sector which benefitted us all the more; us being BBA students, and, with whose guidance we were able to put together all the information necessary in forming this report.

AN INTRODUCTION – NBP National Bank of Pakistan is the largest commercial bank operating in Pakistan. Its balance sheet size surpasses that of any of the other banks functioning locally. It has redefined its role and has moved from a public sector organization into a modern commercial bank. The Bank's services are available to individuals, corporate entities and government.

While it continues to act as trustee of public funds and as the 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 lead player in the debt equity market, corporate investment banking, retail and consumer banking, agricultural financing, treasury services and is showing growing interest in promoting and developing the country's small and medium enterprises and at the same time fulfilling its social responsibilities, as a corporate citizen.

In today's competitive business environment, NBP needed to redefine its role and shed the public sector bank image, for a modern commercial bank. It is now listed in the Karachi Stock Exchange. National Bank of Pakistan is today a progressive, efficient, and customer focused institution. It has developed a wide range of consumer products, to enhance business and cater to the different segments of society. Some schemes have been specifically designed for the low to middle income segments of the population. These include NBP Karobar, NBP Advance Salary, NBP Saiban, NBP Kisan Dost, NBP Cash n Gold.

A number of initiatives have been taken, in terms of institutional restructuring, changes in the field structure, in policies and procedures, in internal control systems with special emphasis on corporate governance, adoption of Capital Adequacy Standards under Basel II framework, in the up gradation of the IT infrastructure and developing the human resources. National Bank of Pakistan has built an extensive branch network with 1250 branches in Pakistan and operates in major business centre abroad. National Bank has earned recognition and numerous awards internationally.

It has been the recipient of The Bank of the Year 2001, 2002, 2004 and 2005 Award by The Banker Magazine, the Best Foreign Exchange Bank –– Pakistan for 2004, 2005, 2006 and 2007, Global Finance, Best Emerging Market Bank from Pakistan for the year 2005, Global Finance, Kissan Time Awards – 2005 for NBP's services in the agriculture field. It is listed amongst the Region's largest banks and also amongst the largest banks in South Asia 2005, The Asian Banker. It has also been presented a Recognition Award –– 2004 for having a Gender Sensitive Management by WEBCOP AASHA besides other awards.

Year 2007 has yet been another outstanding year with the bank recording the highest profit in its history. NBP’s wide range of product offerings, large branch network and committed workforce are some of our fundamental strengths that enabled NBP to achieve exceptional results in a very competitive market. VISION AND MISSION To be recognized as a leader and a brand synonymous with trust, highest standards of service quality, international best practices and social responsibility. NBP will aspire to the values that make NBP truly the Nation’s Bank by: • Institutionalizing a merit and performance culture.

• Creating a distinctive brand identity by providing the highest standards of services • Adopting the best international management practices • Maximizing stakeholders value • Discharging our responsibility as a good corporate citizen of Pakistan and in countries where we operate. MANAGEMENT AND STRATEGIC VALUES ( As told by Dr. Mirza Abrar Baig, Senior Executive Vice President & Group Chief, HR & Administration) The management team as a whole, and each member of it, has clearly defined responsibilities and the necessary authority to manage the insurer in a manner consistent with the strategic direction approved by the supervisory board.

All members of the management team are required to perform their duties with due care and diligence, and for the purpose of maintaining the insurer’s capacity to meet its obligations to all counterparties and constituencies at all times. Members are free of material conflicts of interest that could unduly influence their judgment. Where management is constituted as a management board, no non-executives should be part of the management board. The NBP team found that the management teams of the insurance companies are professional, with clearly defined responsibilities and adequate authorities to fulfill their duties.

Boards of directors (i. e. the management boards) consisted only of executives. Management have sufficient skills and experience in relation to insurance, finance and other disciplines relevant to the management of an insurer. All members of the management team have access to sufficient resources and receive sufficient training to assist them in the performance of their roles. The management of the major NBP bank appears to be highly professional and demonstrates sufficient skills to fulfill their duties.

The NBP team did not review the management of the small locally-owned banks that are not members of the banking association. NBP is continuously transforming its image and customer perception as a modern bank through branch renovation and relocation to more convenient and accessible sites. The team at Operations Group commits itself to change the face of the Bank by way of improving its physical outlook, effective implementation of its systems & controls and the quality of service provided to its customers.

Improving operational efficiency is getting more focus given the challenges being faced by the industry. With opening of customer facilitation centers for the collection of utility bills and making payments to pensioners, the bank expects to reduce its counter traffic at branches thereby focusing more on its customer’s business needs. Customer care is a key area of the bank and various training programs have been conducted for employees to improve customer handling and interaction. Special Assets Management Group is primarily responsible for monitoring and settlement of non performing loans (NPLs) portfolio.

With NPL coverage of more than 76% we believe that non performing loans can contribute substantially in the bank’s profitability through recoveries and settlements. Rising non-performing loans has been an industry wide phenomenon and due to adverse economic factors, NPLs increased by 26% or Rs. 14. 5 billion. We believe that most of the NPLs are the result of business cycle / circumstantial defaults and with the economy picking up and reduction in interest rates; the quantum of non-performing loans is expected to decline.

We are keeping our staunch focus on recovery and reduction in non performing loans is the area of greatest attention. The bank truly values its staff and the vital role they play in successful organizations. The bank gives special attention to attracting, developing and retaining good quality human resource. Our new hiring of top class MBAs as Management Trainees Officers (MTOs) and search for talent within the Bank have helped in preparing second and third tier leadership lines. ‘Female Empowerment’ was launched to empower female employees and impact communities by championing the cause of women’s empowerment in the society.

Today, NBP is determined in pursuing the policy of placing females on responsible and challenging position as Branch Managers, Branch Operations Managers and Customer Facilitation Officers. A number of female MTOs have been selected, trained and posted as branch managers. Currently, 60 branches are being headed by females. HR initiatives and strategy is amid at competitive employee compensation, training need assessment and succession planning. NBP is striving to become an employer of choice through improved HR policies and competitive remuneration.

NBP ORGANIZATIONAL STRUCTURE Organization Structure of the National Bank of Pakistan Main Offices Main Offices of the National Bank of Pakistan are of three types : * Head Office * Regional Offices * Branch Office Head Office Head office of the National Bank of Pakistan is located in Karachi. Head office controls and monitors all the activities of the bank. The President of the National Bank of Pakistan seats the head office. A secretariat is established to assist the president in the head office. The head office is divided into twelve Departments.

A Group Chief controls a Group. President All Groups/Departments are headed by Group/Department Chiefs. President is the head of all Group Chiefs. All strategic matters are discussed and approved by the president and Group Chiefs. In Head Office following are the Group/Department Chiefs: * Operations Group Chief * Corporate & Invest. Group Chief * Special Assets & Remedial Mgt. Group Chief * Strategic Planning & Economic Research Group Chief * Treasury Mgt Group Chief * Risk Mgt. Group Chief * Commercial & Retail Banking Group Chief.

* Audit & Inspection Group Chief * I. T. Planning Dept. & Implementation Group Chief * HRM Dept. Chief * Org. Development & Training Dept Chief * Over-seas Operations Chief NBP HUMAN RESOURCE MANAGEMENT “To provide more talented human resource in relation to competition in all NBP functional areas, creating a motivating environment and maintain industrial harmony”. As evidenced from the Mission Statement, key element of strengthening the HR base of the bank includes the following: * Provision of talented human resource * Employee motivation * Industrial harmony.

Additionally, all the HR initiative implemented at NBP is in line with the above objectives. VALUES They believe that; * People make the organization * People collectively yield results * People have ambitions and aspirations to be distinguished and rewarded * People form the human capital to be developed and invested in. LEADING POLICIES OF NBP Basically lending policies are governed by SBP lending policies; however, NBP has some discounter powers in respect of lending policies. The advances made by the NBP have increased so much and are involved in creating a great amount of return for the bank.

Deposits and the Advances are the two important functions of any bank. NBP takes deposits from the customers and lend them to the others for earning a profit. The difference between the deposit rate and the lending rate will be the benefit of the bank. Civil line branch of NBP is playing the most important role in this category because it has a separate department to deal with the peoples those who want to have money. Civil line branch is dealing with the corporate sector as well. Working Capital and Short Term Loans:

NBP specializes in providing Project Finance – Export Refinance to exporters – Pre-shipment and Post-shipment financing to exporters – Running finance – Cash Finance – Small Finance – Discounting & Bills Purchased – Export Bills Purchased / Pre-shipment / Post Shipment Agricultural Production Loans Medium term loans and Capital Expenditure Financing: NBP provides financing for its clients’ capital expenditure and other long-term investment needs. By sharing the risk associated with such long-term investments, NBP expedites clients’ attempt to upgrade and expand their operation thereby making possible the fulfillment of our clients’ vision.

This type of long term financing proves the bank’s belief in its client's capabilities, and its commitment to the country. Loan Structuring and Syndication: National Bank’s leadership in loan syndicating stems from ability to forge strong relationships not only with borrowers but also with bank investors. Because we understand our syndicate partners’ asset criteria, we help borrowers meet substantial financing needs by enabling them to reach the banks most interested in lending to their particular industry, geographic location and structure through syndicated debt offerings.

Our syndication capabilities are complemented by our own capital strength and by industry teams, who bring specialized knowledge to the structure of a transaction. Cash Management Services: With National Bank’s Cash Management Services (in process of being set up), the customer’s sales collection will be channeled through vast network of NBP branched spread across the country. This will enable the customer to manage their company’s total financial position right from your desktop computer. They will also be able to take advantage of our outstanding range of payment, ejection, liquidity and investment services.

In fact, with NBP, you’ll be provided everything, which takes to manage your cash flow more accurately. Generally Leading Policies Include: * Clean Credit Report. * Compliance with maximum exposure by the bank. * Compliance with maximum exposure that can be allowed to a single party. * Funded = 4 times of equity of the firm. * Non-Funded = 10 times of equity of the firm. SWOT ANALYSIS A SWOT analysis is an effective tool, which can be used to examine the issue that will directly affect the success of alternative delivery mechanism. The emerging banking environment is becoming more competitive with the advancement of new technology.

The banks are striving to provide their customers with prominent and efficient services at lower cost in order to get the competitive advantage upon other banks. During the internship program a SWOT analysis was also conducted which is as follow: Strengths * Deposit security that is guaranteed by Government of Pakistan. * Largest contribution toward Government & semi-Government requirements. * Agent to the SBP for handling Treasury/ Currency Chest Functions. * Collaboration with Federal/ Provincial Government organizations for receipts of taxes & other revenues. * Largest network of domestic & overseas branches.

* More secured jobs of employees as compared to other commercial banks (Job Security). * Sale & Purchase of prize bonds, NIT units, National Defense Saving Certificates (NDSCs) and other government securities. * Heavy project financing, Agriculture, Industrial as well as small loans. * Key role in country’s economic development. * Easy and shortened documented procedure. * Guidance and help of experienced people. Weaknesses * Under utilization of the new technology equipment & procedures of banking. * More formal organizational setup. * Bureaucratic style prevails in the National Bank of Pakistan.

* Lack of highly skilled, trained and professional personnel. * Fixed deposit rates not compatible with the competitors. * Foreign currency accounts governing rules more restricted & not customer oriented. * Bank staff not highly cooperative among themselves as well as with the customers. * Overall employees’ poor attitude towards work. Opportunities * The ability to obtain a larger customer base. * Global expansion. This is an enormous market, which will be a great opportunity in the future. * The ability to take advantage of the growing popularity of internet banking.

* Providing Information Technology loans to the students and educational institutions in order to foster the Computer and Management studies. * Providing the personalized services to the customers. * Offering high deposit rates and cutting down the high lending rates. * Financing the educational institutions and general public welfare projects in order to create a good image in general public. Threats * Continual changing technology. * Uncertainty of the banking industry. * Competition from “lower price” operations. * Possible failure of product due to non-acceptance of customer.

* General competitiveness of the banking industry. QUESTIONS & ANSWERS In addition to all the theoretical evidences we found which includes many conversations with people involved at NBP as listed in our findings, we luckily got the opportunity to meet the two senior executives in the HR department who gave accurate answers to our several questions. The HR function that we were most interested to find about was “RECRUITMENT AND SELECTION” but we also met with the personnel division head and found out about how HR at NBP handles grievances and compensates its employees.

Being students of business administration and on our way to graduation getting into the most eligible organizations remains top priority and of course…National Bank of Pakistan remains top of the list. Obviously getting the group chief of HR, Dr. Mirza Abrar Baig, to talk to us still remains a big deal so we remained short of meeting him; instead we got an interview with Mohib-ur-Rehman Khan who is the manager-employee communication of Human resource management and administration group and, we might add, sits right next to the Group chief who also told us as mentioned earlier what the group chief had to say regarding our research.

Here are mentioned some of the questions we asked and his answers. Q: Sir, please tell us what type of hiring takes place at NBP? A: Certainly. NBP hires in two different ways. One is Contractual hiring and the other is hiring of the main management trainees. Contractual hiring is when we employ someone for three years and then when the contract is about to end we reconsider and sign a new contract. Main management trainees comprise 50% of the attraction for our pool of candidates.

These are the employees to receive proper management training for higher posts. Q: Your external and internal sources for recruiting? A: Currently we don’t consider rehiring but we do focus on employee referrals and if the person who is retiring is valuable to us and no equal has been found out yet to take that place then we often stop the retiree…other than this, as I said earlier, reemployment on contract does take place of that person is hired on contract initially. If and when internal candidates are recruited they are applied to the position of MTOs for future top posts.

External sources include media advertising but not through internet. We advertise in the “National” and “Daily” newspaper once or twice. But we do college recruiting and have been done so quite successfully in the past. Q: So what is the actual recruitment and selection process? A: It is very simple but often tedious and costly. We publish our criteria in the newspaper. Through various sources of which are mentioned above, applicants fill out application forms and submit it to us. Once the applications are accepted there are written tests which are held by IBP (Institute of Bankers Pakistan).

These written tests are both a mix of personality, aptitude and skill tests based on the person’s analytical and communication skills. These are based on the GMAT/GRE format. After the applicants are selected through these tests they are passed through group discussions and panel interviews. These interviews are structured and judged on equal basis. For both types of hiring, first interview consists of a panel of 3 IBP and 1 NBP member and then for the second interview a panel of 2 IBP and 2 NBP members sits. Q: What is NBP’s educational criterion for hiring?

A: NBP requires an MBA degree (Masters in Business Administration) with a minimum 3. 0 CGPA. Q: What do you look for when recruiting personnel? A: We like to hire applicants who are team players with excellent interpersonal skills, have knowledge and use of information technology, have strong analytical and problem solving skills and have excellent written and verbal communication skills in English. So when they tell you in graduation school to emphasize on English, they are not wrong. Q: What happens after selection? A: After selection on-the-job training starts.

These include simulations and video simulated training. They have 27 weeks training with IBP, then 27 weeks training with NBP staff colleagues, then 54 weeks training on job and then they are on their own aboard. All the while during training they are paid their salary. After this they are designated to posts in small cities and sent there for a period of three years and then if a proper appraisal comes in welcomed to work at the head-office. Once they get out of training groups of executives and officers are decided according to their skills and achievement of objectives.

Thus NBP follows competency based job analysis. Q: What about EEO laws? A: We follow all rules. Equal employment opportunity is not violated by NBP. We have set the hiring quota for the disabled up to 2%. Recently we hired a blind lady in the telecommunication department. We do hire blind, deaf or applicants who are ill due to polio. Q: What can you tell us about negligent hiring? What does the bank do if it comes across a person who has had, let’s say, a bad record? A: As I said, NBP follows all the rules.

As the recruitment and selection is both costly and time consuming we don’t want negligent hiring on our hands. Thus we make sure proper guidelines are followed. All the background checks regarding certificates and other educational documents and reference calls are handled by the IBP. Once the salary pay check comes in, first rounds are made and police report is requested from the police department while on the other hand the person for whom verification is being performed is notified of it all. After the police verification report comes in then only the salary is paid.

If there is someone who is identified with a criminal background or false referrals he is told so and asked to withdraw. His information is kept secret (need for privacy). Targeted firing has not been started yet or else the employees go to court. Q: How is appraisal linked with recruitment? A: When appraisal comes in, promotions happen. Seats are vacated and we get the number to employ. This was all we discussed here from Mr. Mohib. While wandering about and reading the HR mission statement and vision we tried to look on into other departments but with little success.

At around late after lunch we got some little time blessed upon us and ultimately met the AVP/Head of Personnel Administration, Mr. S. Hasan Akber Zaidi, of the Personnel and Industrial Relations Division. We grabbed the opportunity to ask some questions about how the HR at NBP handles the various grievances that come in. Q: Sir, please tell us what actually does the personnel department do? A: We basically look into promotions, leave and absences, whether any mishap occurs and also keep record that all due liabilities of the employees are cleared. Q: Promotions would mean that you also look into appraisal reports (ACRs)?

A: We basically have a policy department that makes all the policies for promoting and appraisals and also a separate department who handles appraisals but, yes, we do look into appraisals to know whose being promoted to what extent and how much an increase in salary takes place and how the others would be affected by it. In 1984, when I got hired there was no such thing as a union but now there is and so we keep check as to whether no biasness occurs. Q: Tell us something about the Industrial Relation Department? A: They are the people concerned with the laws of the union.

They make sure that no mishap occurs and in the case of employees going to court they keep check that all lawful procedures are followed in. Q: what about the compensation procedures? A: compensations are handled by the compensation committee. There is no concept of overtime here. We tend to provide a whole lot of facilities according to the posts the employees have and that can include medical, logistics other membership facilities. We also provide loans on land and property as well as other technological things but keep a proper balance of these liabilities.

Q: What happens if an employee fails for some reason in paying his liabilities or disappears? A: All employees have accounts. In situations like these, or when a fraud occurs, we seize and freeze the accounts of those employees. The matter comes into our hand then and until and unless the reasons will be cleared we don’t let any kind of transaction occur. Q: What happens when you catch some one doing a fraud or someone disappears? What if they do not notify you of the absences? A: There is no concept of rehiring. We decide at the time we catch the fraud what to do with the person and he is notified of our intentions.

Most of the time frauds are not tolerated because NBP has a lot on its hands to protect itself from. But there are exceptional cases where we have had some dilemmas and looking into the matter deep has often resulted in a better solution. For example there was a case at Gujranwala where decision making was not easy. An employee of ours didn’t notify us that he was going to take leave, didn’t approve it and stopped coming to work. He was arrested by the police and the bank faced the problem as to let him back or not. The unauthorized absence and an FIR was a dangerous match. But the personnel department looked into it.

Since the police arrest was made on the basis of a family quarrel and had nothing to do with any criminal offence, the bank allowed him back on the job. Such decisions require our foresight and logical reasoning. Again sometimes, retaining an employee is difficult and his grievances have to be handled in a different way and at other times a golden handshake has to be offered in order to let other people take someone else’s place. Q: What about promotions? A: There is a continuous planning going on. Aren’t we all looking for the same things? A raise in salary…a better position. It’s a mad race that we are running.

Constantly we keep an eye on whose going to replace whom and with how much. Sometimes it’s just not the work that lets you through. It’s the connections as well but then these things happen. The important part is that you have to keep an eye open and know everyone. If your colleagues like you…then you are the head of the list. Q: How efficiently does HR keep all these records? A: We have been upgrading and are still in the process of doing so. Everything will become computerized. In all total three hubs will be performed. Q: Are any HR events held? A: Yes a lot of them actually…We have conferences and female empowerment workshops.

Also many dialogue sessions and quiz programs. With many thanks to the two executives who gave us much to think about we left their departments and headed towards the refreshments. OUR FINDINGS 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 other banks.

Importance is being placed on upgrading the quality of human resource for higher and better performance and to meet the demand of growing competition. Not only are the employees being provided with the job related training to develop a talented human resource base at the bank, 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. The last four to five years, a change has been witnessed in the employment pattern, where more women have been employed at more responsible managerial positions, like those of female branch managers and female operation managers. While recruiting and selecting Management Trainee Officers, the bank management ensures that young and qualified females are offered equal employment opportunity.

* TALENT MANAGEMENT The highest emphasis was laid on talent management as it is now globally recognized that talent is the critical driver of corporate performance and that an organization’s ability to attract, develop, motivate and retain talent results in a major competitive advantage. Organizations that do better job for attracting, developing, motivating and retaining their talent boost their performance dramatically. * MANAGEMENT TRAINEE SCHEME Recruitment in the permanent cadre of the bank was kept in abeyance since 1995 and there was induction in the bank for nearly a decade in this category.

To fill the skill gap the bank management obtained special permission from GOP for restricted recruitment in the permanent cadre on an annual basis till 2010. About 700 management trainees have been inducted till end 2007 from the start in year 2003. After a vigorous scholastic and on job training the management trainee officers were placed at responsible in high value branches all over the country. Their contributions in furtherance of culture change, infusion of contemporary work practices and overall growth in bank’s performance is noteworthy.

The Management Trainee Officers have been placed in the fields of General Banking, HR, Compliance, Risk Management, Treasury, IT and Audit. The Management Trainee Scheme of the bank has thus, proved highly successfu