nternship

Report

STATE BANK OF PAKISTAN

Prepared by Marium Arif Jafri (2005-1-53-5387) Major Field: Human Resource Management Duration: February 02, 2009 to March 14, 2009 Report Based on : Option 2 Due Date of submission: 30th March 30, 2009 Report submitted on: 30th March,2009

Institute of Business Management, Karachi.

Fall 2008 Internship Report

State Bank of Pakistan

TABLE OF CONTENTS
Table of Contents..............................................................................................................2 Department to which I was attached.................................................................................3 0.1 FUNCTIONS OF REGULATIONS AND COMPLIANCE DIVISION: ...................................4 0.2 Reward Management & HRIS Division .......................................................................................................................................4 0.3 Talent Management Division....................................................................................5 1 Relation of HR functions with the Corporate Objectives..................................................7 2 The work I did in SBP and its Importance........................................................................8 3 OPTION 2 (Theories Learned and their Application)......................................................10 3.1 Learning Organization (COURSE: Strategic Management).......................................10 3.2 Human Resource Information System (HRIS) (Course: Human Resource Management)................................................................................................................11 3.3 Bell Curve or Forced Distribution (Course: leadership Studies)...............................12 3.4 Management by Objective (MBO) (Course: management)......................................13 3.5 Succession Planning (Course: Recruitment and selection)......................................14 4 New Theories and Concepts Learnt...............................................................................15 4.1 The 720 Degree Appraisal System..........................................................................15 4.2 Organizational Development...................................................................................17 4.3 HR Heads Forum.....................................................................................................17 5 Conclusion.....................................................................................................................18

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State Bank of Pakistan

DEPARTMENT TO WHICH I WAS ATTACHED

Department: Human Resource Department Supervisors Name: Inayat-ur-Rahman Designation: Assistant Director and Departmental Training Coordinator Duration: 6 weeks (2nd February 2009 to 14th March 2009)

The Human Resource Department at SBP is very mature, advanced and fully automated. Following is the detail of the Human Resource Department and the functions of its three divisions.

Mission Statement To transform the State Bank of Pakistan into an Employer of Choice which nurtures talent through its enabling culture.

Vision Statement We are committed to excellence at acquiring, developing and retaining the right talent by: Aligning our HR policies with market Serving as a strategic partner to the line Departments Administering superior and prompt HR services

The following three divisions of Human Resource Department team up for fulfillment of the departments Vision and Mission: 1. Regulations & Compliance 2. Reward Management & HRIS 3. Talent Management

Fall 2008 Internship Report A brief of the functions of each division is as follows:

State Bank of Pakistan

0 . 1 FUNCTIONS OF REGULATIONS AND COMPLIANCE DIVISION:

Disciplinary & Litigation Unit: Handles employee discipline, initiates disciplinary actions to enforce organizational standards and discourage infractions. Union affairs, resolution of conflict, arbitration and litigation processes. Transfer & Posting Unit: Reviews cases of Interdepartmental transfers as per policies and approvals. Postings of officers in SBP (BSC) other national / international institutions on deputation. Employee Separation Unit: This Unit process cases related to resignations by employees from the Banks service and conduct exit interviews of outgoing employees. The case is later on submitted to higher up for approval. Internal Monitoring Unit: Carry out audit of cases received from various Divisions of HRD and ensure compliance of SBP policies and practices. Liaison with internal and external auditors for smooth execution / completion of audit of HRD also falls under the scope of this unit. Business Planning & Budgeting Unit: This unit formulates Departments Annual Business Plan and Budget. Generates quarterly analysis of Business Plan and monthly budget variance report. Keeps track of all the key initiatives and developments being made in various Divisions of HRD. Administration & Co-Ordination Unit: Management of Account and distribution of letters etc in and outside the department/Bank. Also monitors other day to day administrative activities of the Department.

0.2

R EW ARD M ANAGE ME NT & HRIS D IVIS ION

The Division manages issues related to the grant of employee recognition awards and up to date incorporation of employee record in Oracle database. Following units/areas of work are included in this division Compensation & Benefit Planning Unit is responsible to carry out all activities related to developing best market strategies regarding compensation and benefits for our employees.

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Employees Database Unit is responsible for maintaining & updating employee data and HR Broadcast of various messages/ circulars/ orders etc. for prompt communication to Banks employees.

Service Record & Compliance Unit maintains and updates employees personal files, verify employees particulars, and ensure timely confirmation of eligible employees in the Banks service.

HR Automation Unit focuses on Oracle Human Resource Information System and to solve the issues in smooth implementation and management of HRIS. HR Automation unit works for customization of Oracle HRMS with emerging needs of HR processes.

0 . 3 T AL EN T M AN AG EM EN T D IVIS ION

This Division is responsible for fresh induction of SBOTS batches and other professionals through a rigorous induction process in order to ensure presence of quality professionals. Following units and areas of work are the part of this division. The HR Planning, Job Analysis & Design Unit is responsible to develop annual manpower plan for SBP, conduct job analysis, prepare job descriptions, and conduct job evaluation process. The Recruitment Planning & Organizational Development Unit is responsible for attracting, selecting and recruiting the right people from the market. The unit firmly works on adopting latest organizational theories & change management processes to bring in efficiency. The Recruitment Operations Unit deals from placing job advertisements to timely recruitment of competent personnel by using modern selection techniques. The Assessment Centers Unit systematically observes & measures employees/candidates performance for the purpose of recruitment, selection and promotions. The Employee Orientation Unit facilitates in establishing successful productive working relationships through effectively orienting new employees to their respective departments/divisions and to their positions. The Internal Job Posting Unit encourages employees to seek promotion/transfers to fill internal openings and meet employees personal objectives.

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The Performance Management Unit manages and implements PMS in the Bank, advises the annual merit increase and facilitates the promotion process accordingly. The Reward & Recognition Unit in order to foster a culture of acknowledgement and appreciation amongst employees for introducing innovative business practices, showing extra ordinary efforts for achievement of goals and enhancing Banks corporate image uses various methods of recognition ranging from simple Thank you letters to elaborate celebrations and monetary rewards.

The Succession Planning Unit assesses and audits talents in SBP through provision of potential successors. It also helps in identifying training & development needs of potential successors.

The Employee Motivation & Retention Unit works on conducting motivation surveys and developing market based employee satisfaction & retention strategies. The Job Evaluation Unit is responsible for conduction evaluation of positions and grades to ascertain their position in the grade structure

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1 RELATION OF HR FUNCTIONS WITH THE CORPORATE OBJECTIVES

The human resource functions are deeply connected with the corporate objectives. The good HR policies and functions leads to easy achievement of corporate objectives.

All the three divisions i.e. Regulations & Compliance, Reward Management & HRIS and Talent Management unit, work for the attainment of corporate objectives. The business plans of departments are set here. All regulations of employees and rules are set here that makes it easier for employees to work. Compensation and rewards of employees are taken care here, which is responsible to increase the motivation level of employees and to decrease turnover. It is the biggest factor for cutting costs. Employees are the vital element in reaching the goals of the organization. The HR policies charge them up with motivation, courage and self-belief to show their true skills and this leads to acquire the organizational goals more smoothly. Good HR policies, processes and systems help deliver an efficient and effective service. It brings the strategic change in the organization. People start performing better and contributing more towards the organization. The HR functions facilitate change and support the developing agenda of the organization, its component parts and partners. It can provide strategic advice, such as the ability to link people management with the overall objectives of the corporation. HR also plays a role to improve lines of communication, across departments and the council and between strategic and implementation activities. It also influences decision making organizationally and departmentally. HR helps the employees to be flexible and therefore able to meet the current and anticipated requirements of the organization, its component parts and partners

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State Bank of Pakistan

2 THE WORK I DID IN SBP AND ITS IMPORTANCE

I was placed in the Talent Management Division of the Human Resource Department. My work was mainly based on the Performance Management System (PMS) of the bank. I have prepared a report on it which mainly consists of the following sections:

Detail overview of the appraisal system known as Performance Management System of SBP. Brief explanation of other appraisal systems and the best practices of the evaluation systems. The last section of my report is the most important one. In this section I gave detailed analysis of the PMS system with comparison to other present systems. I also compared it with the best practices and evaluated how it is performing. Also I gave some merits and demerits of the system being followed in SBP.

In the end I gave some recommendations to the management.

For the preparation of my report I did some in-depth interviews with employees regarding the problems they faced during the PMS-cycle. It gave me a thorough know-how of the systems and what issues they face in implementation of it.

I also had orientation with the concerned person of each unit of all three divisions of HR department. It gave me overlook of how interrelated the work is and how actually the department works to manage the people and their needs. I also worked on the oracle application they use for the planning phase of the PMS.

My report holds a lot of importance for SBP management because Performance Appraisals is such a part of HR that employees are never very satisfied about it. They always have urge for a better system in which their performance is evaluated more accurately and they always demand a better annual merit increase. So I interviewed a lot of employees to get their feedback in detail that what do they actually want and what problems they find in the present system. As PMS is a mature system in SBP so it demands certain updating to be competitive

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State Bank of Pakistan

with other banks system. My report will give the management clear picture of what is missing in their system and how can they make it better. As an outsider my evaluation of their current system is more reliable or fair because policy makers or employees can get biased in dealing with such a issue with their own stake is involved in it.

My report also contains brief explanation of the other systems and best practices so the management can themselves also select a fusion of other systems which they think is more operational in SBPs culture.

My report contains many points which are result of my discussion with a lot of employees. So the advancements I have mentioned when implemented can enhance employee motivation, commitment and productivity.

In a nutshell, I suggested many advancements in the current system keeping in mind SBPs culture and employees needs. Also my suggestion of making the competency dictionary more comprehensible is appreciated by employees as employees find it quite complex and a time consuming task to decide competencies to be evaluated upon.

I also facilitated the management in the preparation of their new reward policy which is expected to be approved by the governor by May 2009. In this reward policy I gave them new ideas which can add variety to their rewards. As there are already many monetary rewards present in SBP so other rewards like membership in clubs or discounts at recreational places like Arena will be a fresh change for employees. Management really liked my new ideas as it will provide less monetary burden on the management plus will increase employee motivation.

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State Bank of Pakistan

3 OPTION 2 (THEORIES LEARNED AND THEIR APPLICATION)

Department: Human Resource Department

3 . 1 L EARN IN G O RGANI ZATI ON (COURSE: S TRAT EG IC M AN AG EM EN T )

As I learnt in Strategic Management Course, the rate at which individuals and organizations learn is now the only sustainable competitive advantage. A learning organization is an organization which is very good at creating, acquiring, interpreting, transferring, and retaining knowledge. It should also modify its behavior to reflect the new knowledge and insights.

Four dimensions of a learning organization are: Organizational Design Learning organizations are boundary less. People work in teams. Employees are sufficiently empowered to take their decisions (MBO). Organizational Culture The culture of a learning organization is based on strong mutual relationship. People feel like one community working for common objective. Every one cares for others. There is environment of mutual trust and respect. Information Sharing In learning organization, the flow of information is open, timely, and accurate. Leadership The leadership of learning organization has vision, where he wants to steer the organization. To achieve this objective he believes in collaboration with others.

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As I noticed in SBP, there is a lot going on to make it a true learning organization. In recent past, it has gone through its transformation process and that change has not been just for the sake of it. But it has changed the over all culture of the organization. People are eager to learn more. The communication gap has decreased. People are open to new ideas. Everything has become very computerized. Still there are two schools of thoughts in SBP. One is people belonging to very old school of thoughts and other slot is induction of new blood on merit basis. People are encouraged to learn from each other. As there are minimum risks involved, job security is there so people feel comfortable to learn more and increase their knowledge. MBO is followed, which gives the employees freedom to choose their goals and work accordingly.

There are continuous improvements taking place. SBP doesnt have any local competitors but still they believe that their competition is on global basis with other central bank. So it encourages them to strive for better.

There is a lot of experimentation taking place. Anyone can come up with his creative ideas in HR department and can directly talk to the HR director. There is no communication gap there. The leadership has vision. They direct the employees that what training they need and also give them autonomy to work according to their style. There is continuous transfer of knowledge taking place. Even as an internee, employees were always enthusiastic to share their knowledge with me.

3 . 2 H UMAN R ES OU RCE I NFO RM AT IO N S YS TE M (HRIS) (C OURSE : H UM AN R E SO URCE M ANAGE ME NT )

HRIS is an integration of HRM and Information Systems (IS). HRIS helps HR manager to perform HR functions in a more effective and systematic way. One of its definition is the composite of databases, computer applications and hardware and software that are used to collect/record, store, manage, deliver, present and manipulate data for human resources. In SBP, there is a separate division by the name of HRIS which looks after all HRIS activities. It has a unit with the called HR Automation Unit which focuses on Oracle Human Resource Information System and to solve the issues in smooth implementation and management of HRIS.

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HR Automation unit works for customization of Oracle HRMS with emerging needs of HR processes. All the employees related data is there on the software, any concerned employee can check the data from his computer. It decreases the filing work and saves a lot of time and hassle. For instance, when an employee has just one year left for retirement, his name starts appearing in red font in HRIS so alerts the concerned unit to start preparing for the arrangement of his retirement like all clearance of dues and loans etc and succession planning is done for his position. Also compensation unit can check the number of leaves the person has availed and according calculates the employees compensation. Also the PMS is automated. Employee fills up forms online and mentions his goals there which reach to the supervisor and he approves it there. So the employee and supervisor both are connected on the oracle software.

3 . 3 B E LL C URVE S T UDIE S )

OR

F ORCE D D IS TRIBUT IO N (C OURSE :

LE ADERSH IP

In leadership Studies, I studied the concept of Differentiation or forced distribution by Jack Welch where employees are differentiated on the basis of performance. The distribution is ranking employees into performance categories of the top 20%, middle 70%, and bottom 10%, and then managing them up or out accordingly.

Although in SBP, there is no concept of firing the employees. But they still follow differentiation principle to some extent. The employees are differentiated purely on the basis of performance in five categories. A is top 10 %, B+ is next 15 %, B is next 50 %, and last C and D makes up last 25%. A category gets the highest Annual Merit Increase of 14 % whereas category D gets 0 % AMI. All categories are forced except D.

The employees work is compared on their comparative basis and no pre-standards are set. The best performers get the highest benefit. It makes the system more fair and performance based. it is a good way to award the high performers, motivate them and let them feel differentiated from others. The budget is not distributed among employees on the basis of seniority or period of service but a basis for its distribution is solely a persons performance. So the only difference among employees is their performance level and commitment towards work.

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The distribution of budget not only motivates employees but also create a sense of healthy competition among employees.

SBP has different techniques for the Bell Curve for different clusters. techniques applied

Following are the

OG-2 to OG-4 OG-5 to OG-6 OG-7 to OG-8

Department wise Group wise Bank wide

It shows we have inter-departmental competition between employees of OG-2 to OG-4 whereas OG-5 to OG-6 have competition among the groups and there is Bank wide competition between employees of OG-7 to OG-8. Bell Curve helps differentiating among employees on their own performance level. Employees set their own standards through performance.

3 . 4 M ANAGE ME NT

BY

O BJE CT IVE (MBO) (C OURSE :

MANAGE MEN T )

In my management course, I learnt about the concept of MBO. Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization. MBO is primarily used as a tool for strategic planning, employee motivation, and performance enhancement. It is intended to improve communication between employees and management, increase employee understanding of company goals, focus employee efforts upon organizational objectives, and provide a concrete link between pay and performance. An important factor in an MBO system is its emphasis on the results achieved by employees rather than the activities performed in their jobs.

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In SBP, there is MBO based performance management system followed. In SBP PMS system Goals are the WHAT part of the performance. Goals are what an employee is supposed to do and achieve throughout the year. Goals are derived from the business plan of the department. An individual sets up his own goals with discussion with his supervisor. This helps a person to get more motivated towards his work as he has involvement in setting up his goals, so naturally the tasks become more challenging to him. Goals should follow the SMART principle, which are Simple, Measurable, Achievable, Realistic and Time Bound. Goals are key responsibilities of a person for which he is responsible. Goals are defined in three to four lines in Form-I of PMS. Goals include deadlines which makes those time bound. Goals help the employee to remain on track and work in right direction. Setting up goals help individuals to work in accordance to the vision and mission of the bank.

3 . 5 S U CCES SI ON P LANNI NG (C OURSE : R ECRU IT ME NT

AND SE LE CT IO N )

I learnt this concept in my recruitment and selection course. As it names says this concept is about having senior executives periodically review their top executives and those in the next lower level to determine several backups for each senior position. This is important because it often takes years of grooming to develop effective senior managers. There is a critical shortage in companies of middle and top leaders for the next five years. Organizations will need to create pools of candidates with high leadership potential.

In SBP, the new policy of succession planning is prepared and is waiting for governors approval to come in to practice. The management believes that they need to find out people for critical positions which are directly involved in business like joint directors. They need HPE high potential employees for it so that the business process is continued. In SBP it is developed but not implemented, its waiting for approval.

They have designed critical position form. The successors are evaluated on the following criteria: Rating of PMS Panel Interview Individual Developmental Plan

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They have a separate Succession planning unit working on it under the Talent Management division in HR department.

4 NEW THEORIES AND CONCEPTS LEARNT

During my internship at SBP, I came across some of the new concepts which are as follows:

4 . 1 T H E 720 D EG RE E A P PRAI SAL S YS TE M

In my courses I had studied about 360 Degree Appraisals but the concept of 720 Degree is more advanced version of it.

The 720 View

Purpose

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The goal of the 720 Profile is to improve executive performance by providing feedback on specific leadership/management competencies. Benefits o o o o o o Provides data-based performance feedback on key strengths and developmental needs. Lays the foundation for individual development plans. Establishes leadership/management competencies. Facilitates succession planning and staffing decisions. Supports team-building and restructuring efforts. Promotes leadership development and talent retention.

Process The 720 Profile gives participants a picture of themselves as their colleagues see them. This picture is best understood in the proper context. Thus, in addition to Survey ratings from colleagues, participants complete a personality inventory and participate in a short, structured interview. These additional sources provide valuable insights, which are integrated with the survey data in feedback reports written by Consultants. What makes the 720 Profile different o o o o o It has customized the competencies and Survey to match your language and values. The reports deliver the feedback in a concise format that is easy to understand. We put the feedback in context by integrating career goals, business objectives and personality. Our Consultants help people analyze their feedback and create practical, businessfocused action plans. We follow up to ensure plans are implemented and results are achieved.

The 720 Profile is an advanced tool for delivering performance feedback that takes the 360 approach to the next level.

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4 . 2 O RG AN IZ AT IO NAL D E VE LO PM ENT

Although at IoBM we have a course by this name Organizational Development. But I was not very familiar with this concept before joining SBP as an internee. OD is a relatively newer function in SBP. It was developed in recent years when SBP went through its transformation process. OD is about dealing with change. It is about methodologies to remove rust from organization. Its a round the year activity. One needs resources to do OD otherwise its not very successful. Like in PIA it failed due to lack of resources but as banking sector is rich in resources so its successful in SECP, HBL, SBP etc. according to SBP management you need to continuously keep yourself updated. The OD activity is supported by Change Management Activity.

In SBP technology up gradation has taken place. Also HRM is covered for developmental process. Induction of fresh blood is taking place at rapid speed.

4 . 3 HR H EADS F ORUM
The SBP management took the initiative of forming HR Heads Forum of all financial institutions in 2004. This is one very good and handy step for the improvement of quality of HR practices in Pakistani banking industry. The Forums basic purpose is to make sure that: The quality and caliber of Human Resources is same. The imaginative use of technology is there. There is proper application of systems, procedures, internal control and compliance.

This forum is also trying to form uniform policy guidelines for all banking institutions in following fields: Recruitment Compensation and Benefits Performance Management and Career Progression Training and Development Severance/End of service

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5 CONCLUSION

The internship at SBP was a great experience for me. It has given my career a boost as I have learnt a lot working there. It was my first experience in the professional world and I learnt a lot both on personal and professional basis. The HR department of SBP is a very advanced one. They have sophisticated systems for recruitment and employee appraisals. Employees are quite satisfied with overall HR policies there. The hiring of professionals and well deserved people is the best initiative taken by SBP. The HR department is working quite well. The turnover and firing rate is very low. The recruitment process is quite transparent. Even in promotions any employee can challenge the decision of the management. SBP has also made technical advancement by introducing things like fully automated HR Oracle base recruitment and Online Applications etc. Performance based culture is promoted. Also promotions are awarded on performance basis rather than seniority basis. They have set up very definite rules and values for all processes. They believe in hiring the BEST person right at the FIRST time so high importance is given to recruitment process. They believe in their employees who have integrity, enthusiasm and a will to move forward. SBP management believes that with the change in policies and restructuring of staff and management, they are now capable enough to compete with any bank of international standards and if the policies are followed properly for a longer period of time then no doubt SBP will bring a positive impact on the economy of the country.

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