ORGANIZATIONAL BEHAVIOR THROUGH A CONTINGENCY APPROACH

TABLE OF CONTENTS

Introduction Approaches to the Study of Organizational Behavior Organization Strategies Contingency Approach Historical Overview Contingency Perspective And Organization Theory Contingency Perspective And Leadership Contingency Theory Contingency Variables Case Study (Bank Alfalah Ltd) Conclusion

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Introduction An organization is a collection of people who work together to achieve a wide variety of goals, both goals of the various individuals in the organization and goals of the organization as a whole. Organizations exist to provide goods and services that people want. These goods and services are the products of the behaviors of workers. Organizational behavior is the study of the many factors that have an impact on how individuals and groups respond to and act in organizations and how organizations manage their environments. Although many people assume that understanding human behavior in organizations is intuitive, many commonly held beliefs about behavior in organizations, such as the idea that a happy worker is a productive worker, are either entirely false or true only in specific situations. The study of organizational behavior provides a set of toolsconcepts and theoriesthat help people understand, analyze, and describe what goes on in organizations and why. How do the characteristics of individuals, groups, work situations, and the organization itself affect how members feel about their organization? Approaches to the Study of Organizational Behavior Organizational Behavior is the study of human behavior in organizations. There are 4 basic approaches to the study of organizational behavior.

(a) Human Resources Approach: People are the greatest asset of any organization. They are the central sub system and resource of an organization, this approach is concerned with the growth and development of people towards higher levels of competency, certainty and fulfillment. It assumes that increased capabilities and expanded opportunities for people will lead to the improvement of the organizational effectiveness and efficiency. (b) Contingency Approach: This approach is also referred to as situational approach a technique that works in one situation will not necessarily work in all cases. Hence managers have to identify the technique which will best contribute to the attainment of the managements goal in a particular situation, under particular circumstances and at a particular time. This method discourages habitual practices of universal assumptions about methods and people. (c) Human Relations Approach: Organizations should be viewed as a social system with economic and social dimensions. The work environment should be conducive for the restoration of mans dignity. The Humanistic approach is based on the following assumptions: The organization is a system designed to produce a product or a service at a reasonable price.

The organization is a social system through which the individuals try to find expression for their needs, goals and aspirations. Hence the basic model for this approach should be employer participation, job satisfaction and increased productivity.

(d) Systems Approach: The Systems approach to OB, views organization as a unified, powerful system composed of interrelated parts. Activity of any segment of an organization, affects in different degrees the activity of other segment. Our area of focus will be the contingency approach of an organization. Organization Strategies Organizations are collections of interacting and inter related human and non-human resources working toward a common goal or set of goals within the framework of structured relationships. Organizational behavior is concerned with all aspects of how organizations influence the behavior of individuals and how individuals in turn influence organizations. Organizational behavior is an inter-disciplinary field that draws freely from a number of the behavioral sciences, including anthropology, psychology, sociology, and many others. The unique mission of organizational behavior is to apply the concepts of behavioral sciences to the pressing problems of management, and, more generally, to administrative theory and practice. In approaching the problems of organizational behavior, there are a number of available strategies we can utilize. Historically, the study of management and organizations took a closed-systems view. The preoccupation of this view is to maximize the efficiency of internal operations. In doing so, the uncertainty of uncontrollable and external environmental factors often were assumed away or denied. This traditional closed-systems view of organizations made substantial contributions to the theory of organizational design. At the same time, for analytical reasons, organizations came to be viewed as precise and complex machines. In this framework, human beings were reduced to components of the organizational machine. More recently, the study of organizations and the behavior of human beings within them have assumed a more open-systems perspective. Factors such as human sentiments and attitudes, as well as technological and sociological forces originating outside the organizations, have assumed greater importance in analyzing organizational behavior. Contingency Approach Contingency approach seeks to analyze a problem, and then develop the best managerial or organizational solution to it. [Buchanan & Huczynski, Organizational Behaviour (1997) ] The idea of contingency approach is above all a reaction to the One Best Way approach of Taylorism. Essentially, this way of thinking holds that the appropriate solution depends on, ie. is

contingent on the circumstances of the problem at the time. There are two main lines of thought within the contigency approach school: The determinists assert a single variable such as technology, environment or company mission determines the form of an organization. Notable thinkers include:

Joan Woodward and her theory of technological determinism, which asserts that complexity of production determines the structure -- more levels of hierarchy are needed for process production in a modern paper mill than for unit production of hand-crafted items. James Thompson and the idea of interdependence, which states that the structure is dictated by task dependencies and the communication required between them -- hospitals requires intensive communication between employees while bank branches do not. Charles Parrow, who determines structure based on task variety and task analyzability the idea of environmental determinism, which differentiates based on environmental complexity and dynamism -- a telecoms company has complex and dynamic environment, while a soft drink company does not.

Then there are the strategic choice thinkers, who assert that structure is wholly a management decision, and variables like technology and the products the company produces are based on this structure; most notable is the idea of environmental strategic choice, which holds that instead of passively responding the environment changes as in environmental determinism, managers seek to change or enact their environments. When McDonalds wanted to open restaurants in Russia and found the food supply chain lacking, it didn't passively accept this; instead it built the largest food processing plant in the world to adapt the environment to its needs. The contingency approach to management is based on the idea that there is no one best way to manage and that to be effective, planning, organizing, leading, and controlling must be tailored to the particular circumstances faced by an organization. Managers have always asked questions such as "What is the right thing to do? Should we have a mechanistic or an organic structure? A functional or divisional structure? Wide or narrow spans of management? Tall or flat organizational structures? Simple or complex control and coordination mechanisms? Should we be centralized or decentralized? Should we use task or people oriented leadership styles? What motivational approaches and incentive programs should we use?" The contingency approach to management (also called the situational approach) assumes that there is no universal answer to such questions because organizations, people, and situations vary and change over time. Thus, the right thing to do depends on a complex variety of critical environmental and internal contingencies. Historical Overview Classical management theorists such as Henri Fayol and Frederick Taylor identified and emphasized management principles that they believed would make companies more successful. However, the classicists came under fire in the 1950s and 1960s from management thinkers who believed that their approach was inflexible and did not consider environmental contingencies. Although the criticisms were largely invalid (both Fayol and Taylor, for example, recognized

that situational factors were relevant), they spawned what has come to be called the contingency school of management. Research conducted in the 1960s and 1970s focused on situational factors that affected the appropriate structure of organizations and the appropriate leadership styles for different situations. Although the contingency perspective purports to apply to all aspects of management, and not just organizing and leading, there has been little development of contingency approaches outside organization theory and leadership theory. The following sections provide brief overviews of the contingency perspective as relevant to organization theory and leadership. Contingency Perspective And Organization Theory Environmental change and uncertainty, work technology, and the size of a company are all identified as environmental factors impacting the effectiveness of different organizational forms. According to the contingency perspective, stable environments suggest mechanistic structures that emphasize centralization, formalization, standardization, and specialization to achieve efficiency and consistency. Certainty and predictability permit the use of policies, rules, and procedures to guide decision making for routine tasks and problems. Unstable environments suggest organic structures which emphasize decentralization to achieve flexibility and adaptability. Uncertainty and unpredictability require general problem solving methods for nonroutine tasks and problems. Paul Lawrence and Jay Lorsch suggest that organizational units operating in differing environments develop different internal unit characteristics, and that the greater the internal differences, the greater the need for coordination between units. Joan Woodward found that financially successful manufacturing organizations with different types of work technologies (such as unit or small batch; large-batch or mass-production; or continuous-process) differed in the number of management levels, span of management, and the degree of worker specialization. She linked differences in organization to firm performance and suggested that certain organizational forms were appropriate for certain types of work technologies. Organizational size is another contingency variable thought to impact the effectiveness of different organizational forms. Small organizations can behave informally while larger organizations tend to become more formalized. The owner of a small organization may directly control most things, but large organizations require more complex and indirect control mechanisms. Large organizations can have more specialized staff, units, and jobs. Hence, a divisional structure is not appropriate for a small organization but may be for a large organization. In addition to the contingencies identified above, customer diversity and the globalization of business may require product or service diversity, employee diversity, and even the creation of special units or divisions. Organizations operating within the United States may have to adapt to variations in local, state, and federal laws and regulations. Organizations operating internationally may have to adapt their organizational structures, managerial practices, and products or services to differing cultural values, expectations, and preferences. The availability of support institutions and the availability and cost of financial resources may influence an organization's decision to produce or purchase new products. Economic conditions can affect an

organization's hiring and layoff practices as well as wage, salary, and incentive structures. Technological change can significantly affect an organization. The use of robotics affects the level and types of skills needed in employees. Modern information technology both permits and requires changes in communication and interaction patterns within and between organizations. Contingency Perspective And Leadership Dissatisfaction with trait-based theories of leadership effectiveness led to the development of contingency leadership theories. Fred Fiedler, in the 1960s and 1970s, was an early pioneer in this area. Various aspects of the situation have been identified as impacting the effectiveness of different leadership styles. For example, Fiedler suggests that the degree to which subordinates like or trust the leader, the degree to which the task is structured, and the formal authority possessed by the leader are key determinants of the leadership situation. Task-oriented or relationship oriented leadership should would each work if they fit the characteristics of the situation. Other contingency leadership theories were developed as well. However, empirical research has been mixed as to the validity of these theories. Contingency Theory It is a class of behavioral theory that claims that there is no best way to organize a corporation, to lead a company, or to make decisions. Instead, the optimal course of action is contingent (dependent) upon the internal and external situation. Several contingency approaches were developed concurrently in the late 1960s. They suggested that previous theories such as Weber's bureaucracy and Taylor's scientific management had failed because they neglected that management style and organizational structure were influenced by various aspects of the environment: the contingency factors. There could not be "one best way" for leadership or organization. Historically, contingency theory has sought to formulate broad generalizations about the formal structures that are typically associated with or best fit the use of different technologies. The perspective originated with the work of Joan Woodward (1958), who argued that technologies directly determine differences in such organizational attributes as span of control, centralization of authority, and the formalization of rules and procedures. Gareth Morgan in his book, Images of Organization describes the main ideas underlying contingency in a nutshell:

Organizations are open systems that need careful management to satisfy and balance internal needs and to adapt to environmental circumstances There is no one best way of organizing. The appropriate form depends on the kind of task or environment with which one is dealing Management must be concerned, above all else, with achieving alignments and good fits Different types or species of organizations are needed in different types of environments

Fred Fiedler's contingency model focused on individual leadership. William Richard Scott describes contingency theory in the following manner: "The best way to organize depends on the nature of the environment to which the organization must relate". Other researchers including Paul Lawrence, Jay Lorsch, and James D. Thompson were complementing to this statement and were more interested in the impact of contingency factors on organizational structure. Their structural contingency theory was the dominant paradigm of organizational structural theories for most of the 1970s. A major empirical test was furnished by Johannes M Pennings who examined the interaction between environmental uncertainty, organization structure and various aspects of performance. Contingency Variables Environmental change and uncertainty, work technology, and the size of a company are all identified as contingency variables on which the strategy for contingency approach of the organization is based. Whats different nowadays is the length of time between change implementations. It used to be that managers needed to introduce major change programs once or twice a decade. Today, change is an ongoing activity for most managers. The concept of continuous improvement, for instance, implies constant change. Managing in the past could be characterized by long periods of stability, interrupted occasionally by short periods of change. Managing today would he more accurately described as long periods of ongoing change, interrupted occasionally by short periods of stability! The world that most managers and employees face today is one of permanent temporariness. The actual jobs that workers perform are in a permanent state of flux. So workers need to continually update their knowledge and skills to perform new job requirements. For example, production employees at companies like Caterpillar, Chrysler, and Reynolds Metals now need to know how to operate computerized production equipment. That was not part of their lob description 15 years ago. Work groups are also increasingly in a state of flux. In the past, employees were assigned to a specific work group and that assignment was relatively permanent. There was a considerable amount of security jn working with the same people day in and day out. That predictability has been replaced by temporary work groups, teams that include members from different departments and whose members change all the time, and the increased use of employee rotation to fill constantly changing work assignments. Finally, organizations themselves are in a state of flux. They continually reorganize their various divisions, sell off poor-performing businesses, downsize operations, and replace permanent employees with temporaries.27 Todays managers and employees must learn to cope with temporariness. They have to learn to live with flexibility, spontaneity, and unpredictability. So the more an organization is adaptable to the changing scenario whether its internal or environmental the more successful it will be. Theoretical inputs for research concerning the embedding/adaptability-approach if it applies mainly come from the contingency approach in organizational theory (Kieser & Kubicek,

1983): While classical management theorists such as Taylor and Fayol, were looking for the one best way in management and organization design, in the late 50s and early 60s a shift of paradigm arose, claiming that the organizational structure of a company or administration has to fit to the situation in which it finds itself. As these situations vary, different structures turn out to be most effective. In other words the optimal organizational structure is contingent, depending on certain contextual factors. Therefore this approach is labelled Contingeny Approach, in German the context is termed situation; and the approach is called situational approach. (Situativer Ansatz).

Different researchers focussed on different contextual factors and investigated their influence in empirical studies. Joan Woodward (1958) looked into the production technology, Blau and Schoenherr (1971) into the size of the organizations, Burns and Stalker (1961) as well as Lawrence and Lorsch (1967) into the economic environment, in particular market competition and technological change. A broader approach was developed by a British team of researchers at the University of Aston by developing a conceptual scheme for the comparative analysis of organizational structure which took account of several contextual factors at the same time (Pugh & Hickson et al., 1963). In a survey of more than 30 organizations, seven contextual variables such as size, technology, geographical dispersion as well as five dimensions of organization structure (specialization, centralization of decision making, standardization, formalization and configuration) were operationalized by more than 80 indicators. Statistical analysis was directed towards identifying correlations, which were found, for example, between the size of an organization and the degree of specialization and formalization, as predicted by Max Weber. Later John Child joined the Aston Team and added variables describing the role structure and behaviour of organizational members and the performance of the organization, which are considered to be the relevant criteria for judging the fit between the structure and its context. The Aston research programme was adopted in studies in more than ten countries. The whole research is summarized in four volumes (Pugh/Hickson, 1976; Pugh & Hinings, 1976; Pugh & Payne, 1977; Hickson & McMillan?, 1981). Kieser and Kubicek summarized this and related research in a German Textbook in 1976. According to this model, the formal structure of an organization defines the roles of its members in a specific way and thereby directs their behaviour to a certain degree. The performance of the organization depends on the degree to which these role definitions enable members to cope with the requirements resulting from the context of the organization. For example if there is strong competition and a high degree of technological change, decisions about new products and marketing strategies have to be changed frequently and be taken close to the market. A formal structure with a high degree of centralization, specialization and formalization would not fit to the requirements resulting from this situation, rather roles defined by a low degree of these structural dimensions would enable members to act in the required flexible way.

The method to analyze and assess these kinds of relationships is the comparative quantitative analysis, in the most advanced stage a multi-level quantitative analysis, assigning data to the level of the context, the organization and its members. These variables are operationalized in quantitative indicators, and data are collected by standardized questionnaires distributed to several members of each organization under investigation and afterwards aggregated to different indices for each level (for more details see Kubicek, 1975). Empirical studies conducted according to this model could identify some interesting relations but did not show very high correlations and clear cut patterns. Kubicek and Kieser in later editions of their textbook suggested to take into consideration additional factors such as the management philosophy and strategic aspects of top management as well as the broader socio-cultural context (Kieser & Kubicek, 3rd ed., 1992). But the introduction of additional variables did not increase the level of the correlations. The fit of an organizational structure with its context depends on too many aspects and seems to be too complex, to be precisely captured by linear quantitave relations. However, the basic idea of the situational contingency of a particular object on its context as well as the idea that the performance of an institution depends on the fit between its properties and its relevant context is still valid and of great heuristic value as it suggests the critical examination of too early generalizations and asks for situational differentiation. This analytical approach can be found in other areas of management theory too (e.g. leadership styles or strategic management) as well as in studies on the social shaping of technology. For example Mayntz and Schneider in a comparative study of the introduction of videotex in the United Kingdom, France and Germany used a conceptual framework according to which the final design of the technical system and its institutional arrangement was influenced by different constellations of actors in each country which acted in different contexts, defined by the respective legal system, political system, market structure and a different technological pool (Mayntz & Schneider, 1988, p. 282). Kubicek and Westholm used a contingency model of the deployment of e-democracy tools in their scenarios of the future use of this kind of tools (Kubicek & Westholm, 2005). The map of the socio-technical research landscape employed to map different subjects of research in DEMO-net is based on a contingency approach as well.

CASE STUDY For case study Bank Alfallah was chosen. The Bank Al-Falah limited Historical Background Bank Al-Falah Limited was incorporated on June 21st, 1997 as a public limited company under the Companies Ordinance 1984. Its banking operations commenced from November 1st, 1997. The bank is engaged in commercial banking and related services as defined in the Banking companies ordinance, 1962. The Bank is currently operating through 104 branches in 36 cities, with the registered office at B.A.Building, I.I.Chundrigar, Karachi. Since its inception, as the new identity of H.C.E.B after the privatization in 1997, the management of the bank has implemented strategies and policies to carve a distinct position for the bank in the market place. Strengthened with the banking of the Abu Dhabi Group and driven by the strategic goals set out by its board of management, the Bank has invested in revolutionary technology to have an extensive range of products and services. This facilitates our commitment to a culture of innovation and seeks out synergies with clients and service providers to ensure uninterrupted services to its customers. We perceive the requirements of our customers and match them with quality products and service solutions. During the past five years, we have emerged as one of the foremost financial institution in the region endeavoring to meet the needs of tomorrow today. Bank Al-Falah limited was incorporated on June 21, 1992 as a public limited Companies Ordinance 1984 and commenced banking operation from Nov 1, 1992. The bank is growing rapidly in its equity & asset base due to strategic managerial policies and assistance of Abu Dhabi Group. The strength and standing of Abu Dhabi Group, principal owners of BAL have helped Bank AlFalah Limited launch high quality consumer and corporate banking operation in Pakistan. Bank Al-Falah Ltd has embarked upon a rapid expansion program to make sure that our services reach more and more peoples. We are headed towards an optimum sized network reaching major urban centers in Pakistan and soon to go International. ATM machines locations have been increased inmost of the branches but still need to expand their network in every branch and collaboration with other commercial banks in ATM services. It is also introducing a new; more advanced and latest funds settlement computerized SWIFT program in late 2002. Which is a strong point of BAL that makes it a sophisticated and highly technological oriented bank? Regarding the investment and deposits portfolios BAL is playing dynamic strategies to diversity their funds in more productive assets like; investment in T. Bills and export related concerns,

which are producing healthy profits. But all this goes to the staff of Bank Al-Falah Ltd bank that is more proficient and good risk managers. BAL has numerous opportunities in future to increase the volume of business because it has options to tap the market of its own peer units (Al-Falah Car Financing, Al-Falah Visa, & also Al-Falah Home Finance etc) beside BAL has strong assets base, it can diversify its funds in more lending & investment opportunities live; Petroleum concerns, financial derivatives business through treasury. In nutshell, BAL has been performing very well since its birth. All financial institutions of Pakistan regarding commercial banking concerns give Bank Al-Falah Ltd as a leading bank in domestic sector title. Through SWOT analysis we have found that BAL has competitive edge over other peer banks and it wants to tap the prospects of foreign banks to achieve long-term objectives of the bank it ought to have astute, well-designed, comprehensive and dynamic frame of undertaking which might be established after diagnosing the conditions of country and drawbacks due to which it lags behind. Board of Directors The board of directors has the authority in guiding Bank affairs and in making general policies. Some directors are the personnel of the Bank Al-Falah Limited follows. H.E. Sheikh Hamdan Bin Mubarak Al Nahayan Mr. Abdulla Nasser Hawalileel Al-Mansoori Mr. Abdull Khalil Al Mutawa Mr.Khalid Mana Saeed Al Otaiba Mr. Ikram Ul-Majeed Sehgal Mr. Nadeem Iqbal Sheikh Mr. Sirajuddin Aziz Management Bank Alfalah has a top quality management which is listed as follows. Mr. Sirajuddin Aziz Mr. Parvez A. Shahid Mr. Shakil Sadiq Mr. Arfa Waheed Malik Mr. Ijaz Farooq Mr. Adil Rashid Mr. Nadeem Ul Haq Mr. Mohammad Yousuf Mr. Bakhtiar Khawaja Mr. A. Wahid Dada Chief Executive Officer Co-Chairman Central Management Committee Chief Operating Officer Group Head Corporate & Investment Banking Group Head Islamic Banking Group Head Consumer Finance Group Head Operations Group Head Credit & Collections Group Head Training & Development Group Head Commercial Banking Chairman Director Director Director Director Director Director & CEO

Mr. Hamid Ashraf Mr. Zahid Ali H. Jamall Mr. Mohammad Iqbal Saifee Mr. Talib Rizvi Mr. Tariq Mir Mr. Ather Shehab Mr. Mahmood Ashraf Mr. Falak Sher Mr. Imtiaz Ahmad Sheikh Mr. M. Mudassar Aqil Mr. Haroon Khalid

GM Legal Affairs & Company Secretary Chief Financial Officer Group Head Audit & Inspection Group Head Priority Banking & Wealth Management GM International Business Executive Incharge Establishment & Administration General ManagerCredit Monitoring Chief Compliance Officer GM Information Technology GM Human Resource & Quality Assurance GM Risk Management

Vision and Mission Vision:- To be the premier organization operating locally & internationality that provides the complete range of financial services to all segments under one roof. Mission:- To develop & deliver the most innovative products, manage customer experience, deliver quality services that contributes to brand strength, establishes a competitive advantage and enhances profitability, thus providing value to the stakeholders of the bank. Credit Rating PACRA, a premier rating agency of the country, has rated the bank AA (double A), Entity Rating for long term and A1+ (A one plus) for the short term. These ratings denote a very low expectation of credit risk, strong capacity for timely payment of financial commitments in the long term and by highest capacity for timely repayment in the short term, respectively. The ratings of first and second and third unsecured listed and subordinated TFC issues of PKR 650 million, PKR 1,250 million and Rs.1,325 million have been maintained at AA- (Double A minus). Bank Al-Falah branch network The Bank is fully aware that the branch network has direct implications on the services that it provides to its customers. We offer services through a network of 160 branches and 60 state of the art ATM machines (a) (b) (c) Conventional Branches Islamic Banking Branches Overseas Branches

(d)

ATM Machines

Departments of Bank Al-Falah As far as Bank Al-Falah Ltd is concerned, it is one of the top in all-domestic commercial banks in Pakistan. The rapid increase in branch network shows the Banks performance within seven years, which is worth considerable. However, this branch works with mostly all banking operations, which are normally performed by every commercial bank. It has basically following departments under which it operates all functions of bank diligently. These are mainly ; account opening department ; remittances department ;clearing department ; accounts department ; warid telecom department ; cash department; car financing department ; credit department ; credit card department ; trade financing department. Functions (a) Branch banking e.g. Deposits, Remittances, Foreign trade, Lockers. (b) Consumer banking e.g. Credit Cards, Auto loans, Home loans, Consumer durables, RTCs. (c) Electronic Banking e.g. Telephone banking, ATMs, Online banking (d) Corporate banking e.g. Short/Long Term finance, Trade finance, Structured finance. (e) Treasury & Investment e.g. Money market, Forex market, Investments, Government securities, Correspondent banking.

Branches The bank is currently operating through more than 274 branches domestically and an international presence in Afghanistan, Bangladesh and Bahrain, with the registered office at B.A.Building, I.I.Chundrigar, Karachi. Some of the main branches are located in all of the major citiesincluding: Chakwal, Hyderabad, Lahore, Kasur, Islamabad, Gawadar, Peshawar,Faisalabad, Quetta, D.I.Khan, Rawalpindi, Sargodha, Sheikhupura, Sukkur, Sialkot, Multan, Murree, Attock District, Gujranwala, Pirmahal, Mirpur Khas etc.

External links (a) (b) (c) Official website of Bank Alfalah Bank Alfalah Bangladesh Job Site for Bank Alfalah

The bank is currently operating through more than 321 branches domestically and an international presence in Afghanistan, Bangladesh and Bahrain, with the registered office at B.A.Building, I.I.Chundrigar, Karachi. Some of the main branches are located in all of the major cities including: Hyderabad, Lahore, Kasur, Islamabad, Gawadar, Peshawar, Faisalabad, Quetta, D.I.Khan, Rawalpindi, Sargodha, Sukkur, Sialkot, Multan,Dera Ghazi Khan, Murree, Attock District, Gujranwala, Pirmahal, Mirpur Khas, Mandi Bahauddin etc.

Contingency Approach Of Bank Alfalah Ltd Bank Alfalah has emerged as one of the leading commercial bank in the financial sector of Pakistan. Bank has made significant contribution in building and strengthening both the corporate and retail banking in Pakistan. Most of its share are owned by a consortium of Abu Dhabi after the debacle of BCCI, the Ministry of finance acquired its three branches and Habib Credit and Exchange Bank was incorporate on June 21st, 1992 as Public Limited Company under the companies ordinance4 1984, and commenced banking operation from Nov. 01st 1992. It is engaged in commercial banking and related service as defined in the banking companies ordinance, 1962. Following the privatization in July, 1997 Habib Credit and Exchange Bank, assumed the new identity of Bank Alfalah on February 25, 1998 and with this a challenge was launched the challenge to transform this bank into a highly professional most efficient and service oriented institution. Prioritizing its product portfolio in line with consumer needs and wants the bank is committed to develop product that give more value to its customer be it is a simple bank account or complex financial of a major project designing product. Portfolio in response to customers preferences Banks product like Royal Profit, Royal Patriot and Royal Custodial are prime examples of quality and innovation providing timely banking opportunities to its customer. Assessment of the needs and wants of its customer is an on going process at bank Alfalah which help it to continually develop new product and services. Some of our new products ALFALAH MILKIAT FINANCE, ALFAHAL KAROBAR FINANCE, ALFALAH QUICK FINANCE. To continuously offer courteous professional and advanced banking solution banks team has recently been energized by going through training programs with a focus on information

technology with a team of talented services dedicated professional bankers. Bank Alfalah Limited commits all its energies resources and time to cater to all banking and financial needs of customers. To make banking solutions accessible to make and more people. Bank Alfalah Limited has embraced upon a rapid expansion program. Aiming to provide networking that makes its services available to any of its customers in all the major urban centre of Pakistan with a view to go international with its key indicators of progress already soaring to new heights the bank is committed to put all its energies resources and time to bring higher value and satisfaction of its customers employees and share holder. Technological developments are opening up new vistas of solutions of distributing traditional financial product. Concurrently rapid change in customer preferences has related in a major shift from manual to automated services of the bank. Information technology today is the key of the bank to sustain and succeed into the corporate world. Therefore, during the recent past, Bank Alfalah Limited made heavy investment to wards exchanging its capabilities in the area of automation and technology. Bank Alfalah Limited is well positioned to meet client needs with improved competitive advantages. Bank Alfalah Limited is on the way of expansion of its business and branches network presently, there are 295 branches of Bank Alfalah Limited spread all over the Pakistan and 45 still in pipeline to covering major business centers and principle cities. SWOT Analysis of Bank Al-Falah Here we have applied this very useful technique to identify the strengths, weaknesses, opportunities and threats of Bank Al-Falah. (a) Strengths Strong Financial Position :- As we can see in the financial statements of the bank, the financial position of the organization is very sound and its profitability is in increasing. The Earning per share has been increased on a rate of about 50%, which is a very positive sign. Highly Qualified Employees:- The bank has highly qualified and skilled workforce and it has succeeded to attract the best banking professionals from across the country due to its growing pace and sound reputation. Conducive Environment :- The management of the bank is very much concerned with the development of and improvement of the working environment. The bank has state of the art and purpose built branches where all the modern technologies are provided to get the efficiency of the workforce and the customer satisfaction. Govt. Support and Encouragement :- As the owners of the bank belong to UAE and the type of their investment in Pakistan is a foreign investment, the govt. is fully supporting the bank management due to its policy to maximize the foreign investment in the country, to get the economic prosperity.

Fastest Growing Financial Institution :- Due to its successful business policies and the strong financial position the bank has achieved the reputation of fastest growing financial institution in the country. It has greatly increased the customers confidence in the bank. Huge Expansion Plan :- Due to its strong financial position the bank has undergone a huge expansion plan to compete with the existing bank all over the country and with the passage of time the branch network is expanding at a very good pace. Young and Energetic Workforce :- As the bank is a newer one in the country, the bank has an advantage over its competitors because the majority of its workforce is young and not very much over aged. Thus the bank is getting maximum out put from its young and energetic workforce by spending comparatively less on their remunerations. Islamic Banking Division :- The bank is one of the pioneers of the commercial banks who have started the Islamic Banking along with their conventional banking. The bank has a separate network of its Islamic Banking Division which has 16 branches across the country and this network is also expanding at a very good pace.

(b)

Weaknesses: Waiver of charges :- Currently the middle management of bank Al-Falah is the big reason for waiver of charges. Bank Al-Falah loosing a lot of its income likes (Cheque book charge, online charges, statement charges, and other things) because of management. This is a weakness of bank AlFalah. Inexperienced workforce :- As the majority of the workforce consists of young professional, they lack in their experience. And sometimes lack of experience becomes a hurdle while serving to the customers. It is the point where they feel difficulty while competing the other bank, which have a very experienced workforce. Over work Load on Employees :- It was observed in the branch that as compared to huge business the bank is dealing in, the no. of employees is lesser and thus there is an increased workload on the employees. Due to this the efficiency of the employees is reduced.

(c)

Opportunities Rapidly Growing Economy :- At present the Pakistans Economy is growing on a very fast pace. The rapid growth of economy has resulted in the increase in the growth rate of all economic sectors especially in the banking sector which is growing at a fastest speed than ever and in future the growth is expected to increase even a higher rate. Increased Interest Rates :- The SBP has revised the interest policy and the interest rates have been linked with the KIBOR rates. Due to which the

banks interest rate has been substantially increased which will greatly increase the banks profitability. Mega Projects Financing :- As the increase in overall business activity in the country, the investors are launching various types of Mega Projects especially in housing and textile the bank has a great opportunity to finance these projects at very profitable term. Huge Demand for Consumer Financing :- The increase in per capita income and overall economy has resulted into a great demand for the consumer financing especially for home finance and car financing and it is said that this trend will increase more in future. The bank can earn a lot by focusing on its consumer financing sections. Merger with UBL :- After the privatization of United Bank Limited, the management of the BAL has purchased the majority shares of the UBL, and it is planning to merge these two banks. As UBL is the second largest bank in the country, this merger can make the bank the largest bank of the country. Growing Trend of Islamic Banking :- There is a very good growth trend in the Islamic banking in the country and in the world as well. BAL has the advantage of having full fledged Islamic Banking network and the growth in this particular field can be very fruitful for the bank. Spending Practices of Mass :- As the Pakistanis are known for their extravagant practices, and to fulfill their funds requirements they dont hesitate from getting loans from banks. Thus there is a very good scope for the bank to run successful business in such circumstances.

(d)

Threats: Uncertainty of Economy :- Although the economy is growing at a good pace, but there are many factors which results in the uncertain position of the economy. Such as political uncertainty, WTO, increase in poverty etc. etc. As a result there are permanent threats of future risks and losses for the bank. High Rate of Inflation :- The inflation rate of the country has gone above the 10%. This can result into an unfavorable situation for the bank. And especially when the ownership of the bank is UAE based, the net spread for them can substantially decrease. Trend of Mergers :- There is a trend of mergers among the banks to become prominent in the market and to get the maximum market share. This trend can result into the union of some leading banks which can give tough time to the bank and it will become difficult for the bank to compete with them. Privatization of Banks :- Due to its privatization policy, the govt. is privatizing the state owned banks. The change in management may result in the increase in the efficiency and productivity of the banks. Thus it can become a threat for the bank.

Risk of Defaults :- As discussed earlier that there is a trend of launching mega projects in the country. And every one is involved in this trend without taking any measure for the successfulness of these projects. This can result into the failure of this project which can make it difficult for the banks to recover their funds from these defaulters.

Conclusion The dominant approach to explaining organizational structures during the past three decades has been contingency theory (Donaldson, 2001). The central theme of this theory is that the performance of an organization is contingent on the fit between internal structures and the external environment (Donaldson, 2001). An implication of the previous statement is that contingencies of organizational structure include some that are within the organization and some that are outside of it (Donaldson, 2001). However, organizational theorists have focused more directly on the external fit between the organization and its environment (Hollenbeck, Moon, Ellis, West, Ilgen, Sheppard, Porter, & Wagner III, 2005; Laird & Lee, 1979). It is, therefore, an inherent weakness if the theory fails to integrate both the macro (i.e., environment-structure) and micro (i.e., structure-employee attitude or behavior) dimensions (Laird & Lee, 1979). The fundamental premise here is that, contextual factors such as, organizational size and the environment present constraints to which the organization must adjust by modifying its organizational structure and procedures (Lin & Germain, 2003). The varying organizational structures create different personnel or human resource requirements (Hollenbeck et al., 2005) as well as reinforce certain values, attitudes, perceptions and behaviors more strongly than others (Tosi & Slocum, 1984). With proper adjustment optimum performance may be achieved (Lin & Germain, 2003). Contingency theory argues that there is no one best way to organize; rather performance depends on an appropriate fit. Further, the concentration of a fit or a match between the organizational structure and employees may be based on exchanges made between employees and their employing organization and expectations of reciprocity can play an important role in the employees adjustment to the organizations environment (Kristof, 1996). Research has demonstrated that organizational structure interacts with a variety of factors to influence organizational performance. These factors include environmental change (e.g., Lawrence & Lorsch, 1967), organizational size (e.g., Pugh, Hickson, Hinings, & Turner, 1969), organizational production technology (e.g., Perrow, 1967; Woodward, 1965), and organizational strategy (Chandler, 1962). Donaldson (2001) argues that there are three main contingencies that affect structure: task uncertainty, task interdependence and size. These aforementioned contingencies determine the structure an organization would adopt.

References

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