S H

R D Implementation of Broad Banding at HBL

Adnan ur Rehman 082103 Muhammad Ali 0921117 | Rajesh Kumar 1021132

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BROAD BANDING AT HABIB BANK LIMITED
With banking sector reforms 1997, a large number of employees were retrenched under Golden handshake Scheme, as a consequence a skill gap was created in the bank. In order to fill this skill gap and due to ban on hiring in permanent cadre executives from international banks were inducted on three years contract at HBL to steer the process of transformation.

BACKGROUND

A visible disparity in salary packages emerged due to the marketbased compensation of new hiring as against HBLs conventional pay levels.
The persisting anomaly in compensation caused great demotivation in HBL regular employees. Conversely due to the three years tenure, the contract employees also lacked a long-term commitment to the Bank

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BROAD BANDING AT HABIB BANK LIMITED
With the passage of time the contractual employees increased in number.

BACKGROUND

The animosity and feeling of disgust amongst regular and contractual employees increased and the permanent employees blamed management of injustice and favoritism due to salary differentiation.
The regular promotions from officer into executive cadre after every 3 to 4 years also was making the organization top heavy. The rankers were more general bankers with little specialized knowledge and were not equipped with modern day banking concepts. The management wanted a more flatter organization and wanted a more diligent linkage between job responsibility and compensation.

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BROAD BANDING AT HABIB BANK LIMITED

Conflicting institutional priorities Institutional challenges

BACKGROUND

Cultural challenges

Management challenges
Major financial sector threat

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EMPLOYEE CLIMATE SURVEY 2007 KEY ISSUES
S.No
1 2 3 4 5 6

Regular v/s Contract Employees

Statement

Satisfaction Level
2.35 2.48 2.48 2.48 2.5 2.55

Discrimination in the workplace Clear job descriptions Support for performance of job Recognize for good work Environment that fosters Trust Training and Development Programs

7
8 9 10

Physical working conditions

HR Group efforts Work environment My workload is manageable

2.55
2.6 2.61 2.64

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Town Hall HR Issues

Job Insecurity

Contract v/s Regular Employees

Performance Management

Employee De-motivation

Employee De-motivation

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Regular Vs Contractual Executives
EMPLOYEMENT TYPES

GRADES / LEVELS Senior Executive Vice President Executive Vice President

Regular 0 17 78 232 746

Contract 11 29 45 63 61

Total 11 46 123 295 807

Senior Vice President

Vice President Assistant Vice President TOTAL

1,073

209

1,282

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Calculation of Total Guaranteed Pay (Executives)
Figures in Million Annualized Median

Current Grades SEVP (C) EVP EVP SVP SVP (C) (R) (C) (R)

Cash Benefit

Petrol

Car Ben.

Driver

Guar. Bonus

Medical Reimb.

End of Service

Total Comp.

3.73 1.50 2.22 1.13

0.32 0.32 0.19 0.19

0.48 0.89 0.41 0.41

0.07 0.07 0.06 0

0 0.12 0 0.09

0.41 0.04 0.24 0.03

0.35 0.09 0.20 0.07

5.36 3.03 3.32 1.92 2.08 1.24 1.26

VP
VP AVP AVP

(C)
(R) (C) (R)

1.37
0.85 0.89 0.63

0.15
0.15 0.12 0.12

0.28
0.08 0.07 0.07

0
0 0 0

0
0.07 0 0.05

0.15
0.02 0.10 0.02

0.13
0.07 0.08 0.04

0.93

*Loan benefit and club membership is not covered

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Current Regular/Contractual Ratio
2%

Regular Contract

98%

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ANALYSIS & KEY FINDINGS The two-tier compensation issue is mostly a perception issue The data indicates that: There are only 209 employees on contractual package which is just 16% of the executive cadre The gap to catch up with contractual package varies from 43% to 26% which is not as wide as general perception

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IDENTIFIED REMEDY:
Introduce a One-Tier Compensation for the entire Bank by converting all contractual employees on regular payroll Introduce salary bands at each level to factor the salary variance Revise salary ranges to broader scale linking pay with competencies/performance aligning pay with market Alignment of benefits on a consistent basis Faster adjustments in case of critical resources

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IMPLEMENTATION OF BROAD BANDING

PROPOSING ONE TIER

COMPENSATION STRUCTURE

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Emphasis on Variable Pay Benefit Monetization Defining Salary Structure / Levels

TOTAL PAY CONCEPT

STEPS TOWARDS IMPLEMENTATION

Overall Equal Benefit

Elimination of the concept of Two Tier

Communicating it to the employees

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BROAD BANDING AT HABIB BANK LIMITED

NEW TITLES UNDER

BROAD BANDING

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BROAD BANDING AT HABIB BANK LIMITED
Melding of job clusters or tiers of positions into relatively wide bands of pay ranges for the express purpose of gaining flexibility in managing career growth and administering base pay. (ONiel, 1993) Broad banding involves the collapsing of several salary grades into a few broad "bands" with significantly larger pay ranges (Milkovich & Newman, 2002). Pay tends to be market driven in broad-banded pay systems with more emphasis upon internal equity in traditional pay systems (Gilbert Fd Abosch, 1996)

WHAT IS BROAD BANDING???

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BROAD BANDING AT HABIB BANK LIMITED
Internal alignment between regular and contractual employees

WHY BROAD BANDING ?

A flatter structure will: Enhance cross-mobility in career Reduce levels of administration Improve decision making and quicker response time Facilitate attraction and retention of quality resources Improved Efficiency Simpler salary administration process Faster grade placement decisions

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BROAD BANDING AT HABIB BANK LIMITED
Reducing job levels from 9 to 7 by merging grades

KEY FEATURES OF BROAD BANDING

Employees will be assigned to one of the bands according to Their salary/level short term Job evaluation mid to long term The gap in similar level jobs will be adjusted in phases Individuals will move horizontally and vertically based on job enrichment
Pay bands will support pay for performance and flexible hiring Salary adjustments at the time of annual increase / renewal of contract Rationalized titles structure

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Level Alignment/New Titles (Executives)
President / CEO

SEVP

Group Executive

EVP

General Manager

SVP

SVP Deputy General Manager

VP

VP

VP

AVP

AVP

Senior Manager

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Level Alignment/New Titles (Officers)

OG-I

Manager

OG-II

OG-II Assistant Manager

OG-III

OG-III

OG-III

CO/JO

CO/JO

Officer

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Population Distribution (Executives)
HBL Broadband Pay System Pay Band 1 Current Grade SEVP (C) EVP (C) EVP (R) Recommended Grades Group Executive General Manager 11 16 0 Deputy General Manager 0 33 230 Senior Manager 4 15 0 0 0 30 2 57 1A 1B 15* 0 0 45 78 0 0 0 0 0 0 0 0 0 0 Pay Band 2 2A 2B

SVP (C)
SVP (R) VP (C) VP (R) AVP (C) AVP (R) Grand Total
*including 4 EVPs working as group heads

449

297
1,282

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Population Distribution (Officers)
HBL Broadband Pay System
Pay Band 1 Current Grade Recommende d Grades 1A 1B Pay Band 2 2A 2B

Officer Grade I
Officer Grade II Officer Grade III CO/JO Grand Total

Manager Assistant Manager

Officers

1905 0 3728 200

52 0 159 58 8,828

0 2726 0 0

0 0 0 0

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BROAD BANDING AT HABIB BANK LIMITED

MOVING TO ONE SYSTEM

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Towards One System

Regular Employees

One Employment System

Contract Employees

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ONE BANK | ONE TEAM | TEAM HBL
IMPLEMENTATION STRATEGY
Communication/town hall meetings
Five back to back sessions covering over 2,000 employees Senior management at Head Quarter Karachi Islamabad Lahore Multan

Highly interactive communication sessions at all locations

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HBL Organization Restructuring

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Broad Banding

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Key Features

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Implementation Challenges Anticipated

Morale & Motivation Pride in old titles Communication Roll out and selling the concept across organization Managing negative feedback

Horizontal promotions
Negative perception by benefit alignment

Senior levels in merged bands may get a sense of demotion

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Analysis of Driving & Restraining Forces:
Urgent Job Evaluation
Communicate And Education

Communicate And Education

Implement New Policy

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THE FINAL WORD:
The Broad banding despite its serious implications with regard to an individuals career path was successfully implemented by the managements ingenuity.

The communication strategy was cleverly planned out to exclude the negative implications of the strategy. Majority of the officers and executives failed to understand that the career ladder has been made long. Employees concern regarding their placement in the appropriate band based on proper job evaluation is still due which may deteriorate the effects of the entire Broad banding implementation initiative.

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BECOME A STUDENT OF CHANGE. IT IS THE ONLY THING THAT REMAINS CONSTANT

(Anthony J.D Angelo)

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Any Questions?