25/12/2014

STRATEGIC HUMAN RESOURCE MANAGEMENT MBA 2K13

Strategic Orientation of Human Resource

Function of Askari Bank Limited and Allied
Bank Limited
Submitted To: Dr. Naukhez Sarwar

ACKNOWLEDGEMENT

After acknowledging the blessings of Allah Almighty, we would like to thank all the
other helping hands who were with us in making this report a possibility.
We would firstly like to extend our thanks to our teacher Dr. Naukhez Sarwar for his
constant support and guidance during the course of this project. We would also like to thank
Bakar Ahmed HR Head Askari Bank, Humza Khan Post Recruitment Officer Askari Bank
Islamabad and Saqib Saghir Manager Operations (previously served as HR manager) Allied
Bank Islamabad giving us their precious time and providing us with useful insight about the
current working of the Human Resource Department of the respective banks.
Our thanks and appreciation also extends to our parents and colleagues for their
constant support and prayers.

EXECUTIVE SUMMARY
The following project is the examination of the strategic orientation in the banking sector.
The banks chosen are Askari Bank and Allied Bank Limited. A model inspired by work of
Devanna (1984) has been used to carry out the study in both the organizations. There are
different indicators which indicate that the HR function is strategic or not. Indicators like
Reporting line of HR head and HR linkage, Skill set and competencies of the HR to become
strategic and presence of the HR in BOD where strategy is formulated. It has been found that
both the banks are moving towards the strategic orientation of HR function, however Allied is
ahead of Askari Bank, given the analysed indicators. Factors like Organizational leadership
emerged to be important as both have undergone acquisition and since then there has been
leaps and bounds of improvement.

TABLE OF CONTENTS
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TOPICS
Introduction
Project Scope
Research Methodology

Literature Review
Strategic Human Resource Management
Strategic Orientation in Banking Sector

Model under Study

Results and Analysis
Askari Bank
Allied Bank
Analysis

Conclusion and Recommendations

Recommendations

References
Exhibit

Pg. No.
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5
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6
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12
14
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33

CHAPTER 1
Introduction
Strategic HR requires the alignment of HR strategy with the overall business strategy of
either a business unit or with the corporate strategy. The alignment of the HR strategy can be
either through the one-way approach where HR is used as a support function to implement
the strategy, two-way approach where the HR strategy is formulated on the lines of the
3

overarching strategy of organization or integrative approach where HR and business strategy

is formulated by collaboration and co-operation.
As the world is changing and globalization is growing, where the markets domains are
shrinking and competition is becoming intense there is a need to develop a competitive
advantage and that too a sustaining one. Many multinationals have understood that the human
resource can serve a sustaining competitive advantage of the organization and it needs to be
linked to the overall business strategy. By doing this the strategy formulated will be the one
which is in sync with the human resource of the organization and secondly the execution will
be carried out by the HR function. This will all translate into organizational effectiveness and
enhance the overall performance.
To observe whether HR function is strategic or not man indicators can be pointed out. For
instance devolution of operational work to line, presence of HR representatives in the top-tier
of organization, reporting line of the HR head (whether direct or indirect), the organizational
culture and structure of it and most importantly the skill set and competencies of HR function
and its Head.
However in becoming strategic the organizations have to face a lot of obstacles and hurdles.
First of there should be motivation and urge at the upper echelon to be strategic and they
should be aware of benefits of being strategic. Most of the time knowing all the benefits and
the advantages of strategic still organizations are unable to create a horizontal or vertical
strategic fit because they simply dont have time to do so. The administrative and operational
work takes up so much of their time that they are unable to perform strategically.
Then if they move towards devolution the line complains to be burdened with work, they
believe is not their responsibility. Thus the friction between line and HR originates from here.
Here the perceived image of HR also comes in light as what personnel around the
organization think about HR. This image whether positive or negative has impact on the
relationship that HR has with the employees.
Even if the HR is relieved of the operational work, not necessary that they perform
strategically. There is no guarantee to that and that is very crucial concern due to which
questions arise on the performance of HR department and its image.
Project Scope:

Initially two industries were given to us to choose from one was telecom industry and the
other was the banking sector. We decided to do our project on the banking sector of Pakistan.
We chose two banks for conducting our study and they were Askari Bank Limited and Allied
Bank Limited. There were basically two reasons for choosing these banks one was that they
both have a history of acquisition in their portfolios and the other reason was that according
to our initial research these two banks are also considered as each others strong competitors.
The main focus of this project is initially to check the strategic orientation of the Human
Resource function of the two banks and then give our analysis accordingly. For this we are
using the model proposed by Devana. After identifying certain factors, we checked the
strategic orientation of the bank. Initially an introduction is given and after that the banks are
analyzed on the basis of the model and in the end our conclusion is presented.
Research Methodology
For finding out the extent of strategic orientation of the two banks, we conducted in-depth
interviews with senior HR personnel of the two banks. The conclusion that we will be
presenting in the end will be based on our interpretation of the data collected through
interviews from the respected banks. A guideline about the interview questions asked from
the concerned HR personnel is attached in Exhibit 1.

CHAPTER 2
Literature Review
Action plan, course of action are often considered synonymous to strategy formulated by an
organization, however to be specific strategy is defined as to be an approach followed by the
organization to create a match between its internal resources and external opportunities posed
by the environment (Grant, 1999). Hence business strategy is often associated with SWOT

analysis of the organization and for the purpose of implementation Michael Porters five
forces model is used. Strategy is also referred to as a decision making pattern of any company
revealing its goals and plans of how to achieve these achieve those goals (Andrews, 1997) or
some have labelled it as a ways to identify the domains of the market where the product of
company is going to be sold and companys structure and processes are a mechanism through
which these strategies are pursued (Miles, Snow, Meyer and Coleman, 1978).
Strategy is a way through which the compnay gains an edge over its competitors and the aim
is to create competitive product market for the economic gains (Barney, 1986). Strategy can
be broadly divided at three levels, corporate, business and functional. Corporate strategy
focuses on corporate level resources to define the activities of the firm (Grant, 1999) or it
transforms the companys competence into a competitive advantage, whereas the business
strategy determines how the company competes in a given position (Andrews, 1997).
As organizatonal strategy finds fit between external and internal environment, strategic
management examines how the goals can be adjusted and amended so that organizational
strengths and weaknesses exploits the environmental opportunities and threats (Bratton &
Gold, 2003). Both business strategy and corporate are the results of strategic management
and in case of every company the outcomes of the efforts are uniques corresponding to each
situation (Andrews, 1997).
Strategic Human Resource Management:
As the importance of human resources grew in the organizations and played integral part in
its success, the personnel management became more strategy-driven (Perry, 1993). Human
Resource Function and strategy merged together to give birth to Strategic HR and under this
approach the HR managers are asscociated with other managers and they will advice them in
aligning their behaviors with overarching goal and strategy (Beer, 1997).
The overall strategy trickles down to lower levels and HR function manages the
implementation of that startegy at all levels. Corresponding to competitive strategies the
behaviors of organization are adjusted and human resource practices are designed (Schuler &
Jackson, 1987). For instance innovation is a strategy then performance appraisals should
support group-oreintation, jobs will be designed so that their skills are developed, broader
career paths are designed and long-term incentives are offered. Organizations have aimed at
becoming strategic to achieve co-ordination between the functions, commitment of
employees, leadership competence, innovation and creation, and open communication (Beer,
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1997). For acquisition of all of this a cultural revolution is required and external factors like
competition, globalization and need for continuous change have pushed towards these state.
Human Resource Management have two basic approaches, firstly it had to examine the
relationship among HRM and organizationss performance and secondly tackle the increasing
critique on it (Guest, 2002). Along with this HR has also realized that they simply dont have
time to do both functions, strategic and administartive (Beer, 1997) hence devolution of
some administrative work is required and this leads to friction between HR and line. Hence
admist the creation of strategic HR the critique is done on HRM for being a support
department and enjoying priviledges, while operational work is carried out by the line. Line is
not appreciative of the devolution and tension does exist even though HR functions intention
behind devolution was to create an integrative and collaborative culture (Cunningham &
Hyman, 1999). Integration of the workers into the overall business has also been done to
enhance the commitment and identity of interest with the organization (Bratton & Gold,
2003). However it does not produce the desired results all the time.
For better understatnding of the HR function it can be studied undet two models. The models
are of the opposing nature of managers and their control startegies. Thus argued that due to
their broad and divergent assumptions both of the models cannot be brought under a single
model of HRM (Truss, Gratton, Hope-Hailey, McGovern & Stiles, 1997). Hard models
refers to more strict and strategic control and softer model of HRM is inclined towards
Theory Y and control through commitment. While the HR function turns more strategic they
devolve responsibilities to the line, hence the line managers takes the responsibility of people
management roles. Now it is up to them how they perform this role and which style they
prefer, can be hard one which is control-centered or can be a soft one which is more of
facilitative (Cunningham & Hyman , 1995). However many organizations state that they are
focusing on softer model of HRM and that is what they prefer, but in reality the
implementation is that of the Hard model of HRM. This difference in rhetoric and reality
should be eliminated (Truss, Gratton, Hope-Hailey, McGovern & Stiles, 1997).
With changing times there is a need to create a value-added HRM. Regarding this the four
different perspectives about HRM come in play. The debate is about whether best practice
or best fit has added more value to HR. One is related to universal success and the other
takes into account the contextual factors. It has been deduced that along with other factors
including the resource-based model, some instituational mechanisms play a significant role in
7

development of HR practices and policies (Paauwe & Boselie, 2003). It has been argued upon
that universalistic perspective is too simple to be implemented in the dynamic world which is
constantly changing (Rowley, 1997).
Further there is an opinion that one of the intermediate factors between HR and
organizational performance is a strong organizational culture and climate, which translates
into a strong situation that the individuals of company share and this makes them more aware
about what is expected of them and in what way they should be exhibiting their behaviors
(Bowen & Ostroff ,2009). An HR systems strength explained how the employees contribute
to the creation of organizational effectiveness. Organizational culture does play an interactive
role in development of competitive advantage (Chan, Shaffer and Snape ,2004). In addition to
this the organizational culture plays essential and an intermediary role between HR systems
and dvelopment of products and services. HR systems and culture have reciprocating effect
on each other for instance, if innovation is required then HR systems should innovation
orientation. (Lau & Ngo, 2004). Similary an open and colloborative culture would have effect
on the HR practices and policies.
Strategic decision making is done at Chief Executive level, rather than at Board of Directors
(BOD), hence the BOD membership is not necessary for the strategic decision making.
However it is evident that the Directors do influence the strategic plans and while developing
the representatives from specialities acted as general managers of business instead of going
ahead with advocacy of their respective specialities (Kelly & Gennard, 2007). Another aspect
regarding the development of HR function as strategic is the presence of HRs representative
at board level or where the strategies are formulated. It has been observed that HR has
presence at the executive leve and due to this the HR has been observed to become
increasingly strategic in MNCs (Kelly, 2001).
HR can become strategic or align itself with busine startegy in two ways, either reactvely or
proactively. Reactive mode is when the busines strategy dictates the development of HR
strategy and its practices are designed to complement business startegy. However the
strategically proactive mode is when HR creates the culture and linked the internal processes
and structure of the organization, while making it flexible to changes (Brockbank, 1999).
Many of the Forutne 500 companies have indicated towards integrated strategic planning and
HR systems. HR executives were found to be part of the planning process as the strategic

partners hence also played an essential role in implementation of buiness strategies (Martell
& Carroll, 1995).
Along with being proactive, there is a need for HR head to have good interpersonal
relationship with directors and an effective management style which is appreciative of the
contribution towards achievement of business goals. This will add upto development of
people oreintation and foster a culture of collaboartion, which would translate into strategic
HR function. (Kelly & Gennard , 1996).
As the world is changing and the organizations have widely spread over the globe there is
increased need for decentralization of the HR operations along with its role in startegic
decision making, centralized values or the perceived importance of the HR function itself
(Jacoby, Nason & Saguchi, 2005). Where some argue that decentarlization does not
necessarily means HR has become strategic, others found that devolution to line has positive
relation with the startegic integration and HRM functions performance, but a weak realtion
was observed between the performance and strategic involvement of HR function (Teo &
Rodwel, 2007)
Strategic Orientation in Banking Sector:
Human capital is one of the most critical factors in the strategic success of banks in general.
Researchers (Ulrich, 1995) have also pointed out the need for matching HRM with strategy.
In order to gauge the effectiveness of these HRM practices, they must contribute to the
bottom line of any organization (Pfeffer, 1994, Huselid, 1995 and Guest, 1997)
Commercial banks are profit making institutions that deal in a wide range of financial
services including deposit, loan and trading facilities. In todays highly competitive banking
business, commercial banks with almost comparable products and services are working on
improving their customer service which will act as a competitive edge for them. In achieving
this they either downsize or right size themselves to be more cost effective. This current trend
has evolved great need for Hr to be strategic (Rajan, 1998)
In todays world of intense competition, in order to maintain a competitive edge a highly
committed workforce is a pre requisite. As strategic partners, HR managers should know
which HR practices will translate in the overall business strategy of an organization (Romeo
V.Suares, 2009)
9

To remain in business commercial banks have to retain a high degree of credibility and
financial stability for which it has to keep track of all uncertain factors that may arise. This
requires sound and well thought through HR policies and managing of significant risks in the
human resource area. These risks include recruiting the wrong people, inadequately training
and developing employees and failing to cater to future human resource capability needs etc.
A research carried out by, Omondi, Magutu, Onsongo and Abongo (2011) was designed to
collect cross sectional data on SHRM practices employed by commercial banks to managing
its human resource for enhanced performance. The study targeted all commercial banks in
Kenya and its findings indicated:

The number of years an organization has been in operation affects its HRM
practices. Those banks which had been in operation for longer had more properly
aligned best HR practices with respect to the changing external environment.

The number of employees also influences the HRM practices in an organization. It

was found that banks generally have a balanced number of management level and low
cadre employees

The results from the data analysis and findings from this research led to the conclusion that a
number of HR practices can act as strategic weapons for a bank to remain competitive. These
can be divided in two components:
1. Post-entry/ on job SHRM practices which include implementing a banks chosen HR
practices while effectively managing the resources to support the business strategy.
2. Pre-entry strategic HRM practices which allows the organization to recognize the
roles of employees before they are recruited, careful selection, Development and
training of the employees.

According to the research by (Omondi, 2011) the factors discouraging the adoption of SHRM
practices by commercial banks relate to poor communication between management and
employees, ineffective decision making process and the inability of the union representatives
10

and managers to discuss their concerns openly to find a solution. A second major component
shown by the findings was of the failure of banks to apply non traditional incentive pay plan
and the reluctance in profit sharing with its human resource. Another factor was that of poor
job orientation of the employees, with less clarity of goals and work behaviours to exhibit on
the job.

CHAPTER 3
Model under Study
The basic inspiration behind the model that is to be studied in this project was derived from
work of Mary Anne Devanna regarding one of the strategic HRM model, called matching
model. Her work was first published in 1984 in Strategic Human Resource Management
along with the work of Charles J. Fombrum and Noel M. Tichy. Devanna in her framework
had developed an argument that the HR systems along with organizational structure should be
11

operated and controlled in a manner that it is coherent and integrated with organizational
strategy.
By making some addition regarding the indicators that make HR function strategic this model
has been changed and then studied in the respective organization. Following is the model:

Business Strategy

Resource: Skills and

Competencies
Presence of HR head
in BOD

Organization structure
and Culture

HR Strategy

Reporting channel
and linkage

In this model it can be seen that the business strategy is effecting; organizational structure and
culture and formulation of HR strategy. Organizational structure and culture is also having an
effect on HR strategy and the HR strategy is in turn influencing the organizational structure
and culture. Meaning either it can be that the Hr strategy formulated is in accordance to the
structure and culture of the organization or the HR strategy can dictate the development of
culture and structure. This happens when HR is proactive in organization.
Now there are other factors that create the alignment between HR and business strategy and
decides whether HR is reactive or proactive. For instance the quality of the human resource
the department and the organization is equipped with. The skill set and competencies. This
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can include the planning, organizing or the decision making ability among the HR department
and its Head. If the HR head is equipped with skills to make the decisions and become
strategic then there are chances that leader will pave the way for strategic HR function.
Reporting channel and linkage is another factor which is also been observed in the HR
department when it is performing strategically. What kind of reporting channel direct or
indirect has an impact on the HR strategy being in line with business strategy. Directly
reporting means that the HR head is directly giving feedback to the business unit head and
there is no mediator in between. This will help in clear communication between the two and
much better input could be given through direct communication lines. Secondly the linkage is
observed whether it is one-way, two-way or integrative. This also explains that how much
preference HR is given while formulating the overall strategy and whether their input is
considered or they are merely a tool for implementation. This again sheds light on the
reactive or proactive nature of the HR function.
Lastly the presence of HR head on the BOD of directors will be observed. Whether HR is
given importance that they have their representation in the BOD or not and are they taken
into account when designing the strategy. If this is there then there are chances that HR
function will strategic in the organizations.
Through studying all these factors HR function will be analysed that how much strategic is
the function. These variables explain the designing and formulation of the HR strategy, but
through that the current state of HR function will be decided, that how these factors play their
role in making HR strategic.

CHAPTER 4
Results and Analysis
Askari Bank:
As a public limited company, Askari Bank was established in Pakistan on October 9, 1991. It
started its operations on April 1, 1992. The bank is listed on the stock exchanges on Karachi,
Lahore and Islamabad. From the very start, the bank has followed a growth strategy by

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investing in the improvement of service, technology and enhancing the capabilities of its
people.
Vision
To be the bank of first choice of the region.
Mission
To be the leading private sector bank of Pakistan with an international presence, delivering
quality service through innovative technology and effective human resource management in
modern and progressive organizational culture of meritocracy, maintaining high ethical and
professional standards while providing enhanced value to all our stake-holder, and
contributing to society.
Core Values
Following core values are what being followed at Askari Bank:
-

Commitment: Passionate about our customers success and delighting them with

quality of our service.

Integrity: A distinctive investment, delivering outstanding performance, return and

value.
Fairness: Exemplary compliance, governance and business ethics.
Teamwork: Caring for our people and helping them to grow.
Service: Dedication towards social development and improvement in quality of life.

Like for every other bank, the regulatory authority for Askari Bank is State Bank of Pakistan.
It has to follow the guidelines given to them by the regulatory authority and if they fail to do
so, then in the year-end audit f discrepancies are found they will have to pay heavy fines. It
has a vast presence all over Pakistan. It has divided its presences in to three regions North,
South and Central. It has branches present in 85 cities across Pakistan.
Askari Bank is catering to the needs of people from all walks of life. This is done by them by
providing the customers with wide range of banking products in the following areas:
-

Commercial
Consumer
Agricultural
Islamic
Corporate

Human Resource Department at Askari Bank

14

Coming on towards the HR department of Askari Bank, first of all let us see the general
hierarchy and reporting channel of the bank

President

HR Head

Assistant
Vice
President

Operating
Grade 1

Operating
Grade 2

Operating
Grade 3

Junior
Officers

Following HR practices are seen being followed at the bank:

-

Planning:
The HR department is responsible for forecasting the demands of employees in the
upcoming year. Like if new branch is to be opened then how many employees will be
required and if the requirement would be fulfilled by internal sources or external

hiring needs to be done.

Recruitment:
As mentioned above, Askari Bank is following the growth strategy so frequently
recruitment is done of new and experienced staff. For this purpose, they give
advertisements in the newspapers, on their websites and they also receive direct
applications which are stored in their data bank and in time of need are referred to it.

Selection:

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After the candidates have been shortlisted they are called for a written test (usually for
the fresh graduates). After the candidate has passed the test, he goes through a series
of interviews with different officials and finally the candidate has to undergo through
a medical test and then he is hired.
-

Training and Development:

Askari Bank pays special attention towards the training and development of the
employees as this is evident from the fact that they have a separate training wing and
employees usually MTOs (management trainee officers) and JOs (junior officers)
receive training related to the different banking areas and personal development.
Refresher courses are also offered to the current employees so they remain up to date

with the changing trends of the industry.

Compensation:
In the area of compensation, we have come to know that they follow the policy of

external equity.
Performance Appraisal:
This is the most important practice for any organization as because of this the salary
increase, promotions and training needs are identified of the employees. At Askari
Bank, for the formulation of the Annual Performance Report they follow a 360 degree
appraisal system. For different identified skills the employees are rated on a scale of
A-E which has different percentages.

Strategic Orientation of the HR Function at Askari Bank

At Askari Bank, the HR department was headed by the HR head. He considered himself to be
strategic partner and someone who was bringing change and facilitating it. He has been in to
this position for the past three months. He is transferred here from the training wing of the
bank. The HR head before him served at this position for almost a year. The HR head
considered the HR function to be highly strategic and was of the view that we have become
60% strategic and are still evolving.
HR does not have representation at the Board of Directors. A committee by the name of HRC
(human resource committee) is present where different strategies are formulated and their
recommendations are sent to the BOD where discussion is carried and then sent back to the
HRC. (two way linkage). The bank has decided to open almost 100 new branches in the
coming year so the HR head is of the view that we will not be developing strategies for just
for the present but we will be looking at the future. We will have to now look at the potential
8000 employees we will have in the future. We will have to design policies in such a manner
16

that cater to the change the employees will go through. When asked to elaborate on the
change he was referring to, he said because of the opening of so many new branches many
employees who were previously nobody will come out in the front, we have to develop them
in time so when the time comes they can take on the new positions with ease.
A senior HR officer when asked of his views about the strategic nature of the function, he
replied On a continuum of 1-10 one being the function administrative in nature and 10 being
the function strategic in nature, I would place my HR department at 4. But he shared the
same view as his head that we are evolving and becoming more strategic in nature. When
asked to elaborate on this fact, he was of the view that we have started devolving some tasks
to the line like now line could do transfers at the regional level. The employees whose
services are to be terminated, they are solely identified by the line and their decision is
considered final. It was also told that that HR was freeing its hands from strategic work by
bringing in automation of different tasks as well like the annual appraisal system was in
process of being automated.
There are certain practices that are done by HR and line together like the performance
management system initiated by HR and completed by line but finalization is still in the
hands of HR. For recruitment the request is initiated by the line but then the process is
followed through jointly by line and HR.
There are still some practices that are solely in the hands of the HR department like the end of
the performance management process, HR metrics, compensation etc.
When asked that what kind of approach is being followed at the HR department then the
employees were of the view that they are following a proactive approach. When asked that
what was the evidence for this, it was told that HR department is working towards the
betterment of the employees and is taking many self initiatives like a survey was being
conducted to improve the employee commitment, cash handling allowance was under
revision, a rule that was established that no one can ask the women employees to work
beyond 5:30 p.m. this was aimed at providing work life balance and many other initiatives
like that were also in the pipeline.
They were also of the view that if talked in terms of profits then, definitely after acquisition
the bank is performing better. From the discussion it was also inferred that the bank was
moving towards the model of business partners as they had HR representation at the regional
level but they were acting in the supporting capacity only.
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When an employee who recently shifted from a line position to the HR department was asked
about her views that what line thought about the HR, the answer was what we always find in
literature, that the line is not happy with the role of HR. she was also of the view that HR
failed to understand the cultural inconsistency across different branches as she said that
depending upon the type of customer we had to change the way of dealing with him but HR
is always of the view that no matter what the same guidelines have to followed across all the
branches. The policies are not made by keeping line in the loop. Even when policies were
being made for the benefit of the line, they could not reap benefits from it properly. When the
employee was asked that after shifting to the HR department whether her views have changed
or not. To this she replied that what I have learnt till now is that the HR works on employee
satisfaction and line works on customer satisfaction and it is a very difficult job to get both of
them on the same line. When asked that whether you feel comfortable with the centralized,
bureaucratic structure, her answer was yes that now she understands that the bank needs to
follow this kind of structure as they are dealing with someone elses money.
Allied Bank:
Allied Bank started its journey by the name of Australasia Bank in Lahore in the year 1942. It
changed its name to Allied Bank in the year 1974. The bank was acquired by Ibrahim Group
in the year 2004 and it was again renamed and became Allied Bank Limited. Allied Bank has
a strong presence of over 70 years and is dealing with clients of multiple natures. This has
been made possible for them by the banks humongous network of 900 branches and 700
ATMs present all over Pakistan.
The bank believes in developing a strong culture among its employees so that they would be
able to carry out the business tasks with consistency. Through the following vision, mission
and core values the bank believes to have boarded on a ship that would help them move
forward in the 21st century.
Vision
To become a dynamic and efficient bank providing integrated solutions in order to be the first
choice bank for customers.
Mission
-

To provide value-added services to our customers.

To provide high-tech innovative solutions to meet customers requirements.
18

To create sustainable value through growth, efficiency and diversity for all

stakeholders.
To provide a challenging work environment and reward dedicated team members

according to their abilities and performance.

To play a proactive role in contributing towards the society.

Core Values
Allied Bank follows the following core values
-

Integrity
Excellence in Service
High Performance
Innovation and Growth

Allied Bank also falls under the regulatory authority of State Bank of Pakistan and has to
adhere to the guidelines provided by them. The bank is divided in to three sections North,
Central and South. Their central region is considered to be the largest as it is further divided
in to two subgroups Central 1 and Central 2 each having 7 regions of its own. The remaining
two areas have 9 regions each. The general hierarchy of each section is given below:
Preside
nt

North

Central

South

Group
Chief
Group
Head
Region
al Head
Human Resource Department at Allied Bank
HR department at Allied bank is considered as a very important function at Allied bank. This
can be said from the fact that they have developed a mission statement for their HR
department which is
19

The mission of ABL HRM is to guide, facilitate and coordinate Organization wide effort to
provide innovative, cost effective human resources programs to recruit develop and retain a
highly qualified diverse workforce, reward employees throughout the organization.
The following HR practices are followed at the bank:
-

Planning:
To cater to the changing needs of the bank, the HR department tries to anticipate the
workforce needs of different branches. For this purpose the department launches an
extensive forecasting process to prepare themselves to cater the needs of providing

talented and qualified people at the right time for the right position.
Recruitment & Selection:

The process of recruitment and selection at Allied Bank aims at identifying the right
person for the right job at the right time. It also aims at creating a diversified and balanced
and unbiased workforce. For recruitment, external and internal sources are both utilized
for finding a candidate. In external sources, the bank places advertisements in leading
newspapers and on the banks website. When the bank utilizes internal sources, then it
uses its established data banks and places advertisements on the internal news boards.
When the candidates have been shortlisted then they undergo through written tests and
series of interviews and after compilation of the results, the final offer letter is issued to
the candidate.
-

Training and Development:

Hiring good employees is just the initial step towards profitable growth of the business.
After hiring the best, the organization needs to constantly train and develop its employees.
Allied bank is no different from this; they not only give training to their current
employees but also give refresher courses to its current employees. They have two
training academies in Lahore and Karachi and one in Islamabad. Trainings are also given
to the employees in the form of seminars whenever there are policy changes At Allied
Bank; training is given to the employees after conducting an in-depth training need
analysis. This starts by conducting an organizational need assessment then task needs
assessment and after that employee needs assessment. After these the training objectives
are developed and then training is designed accordingly.
-

Compensation and Benefits:

20

The compensation packages offered at Allied Bank are very attractive and after joining
this family the employees get entitled to many monetary and non-monetary benefits like
gratuity fund, provident fund, staff loans, bonuses, medical insurance, attractive salary
packages etc.
-

Performance Appraisal:

After serving at the bank for a certain time period, the employees go through the
performance appraisal process. This is done to determine the usefulness of the employee.
It can also be used increase the motivation and performance level, identify training need
etc. Allied Bank also uses the 360 degree performance appraisal system. In this, the
feedback from all the sources is given great importance.
-

Career Development

Allied Bank also pays a lot of importance to the career development of its employees. For
this purpose different job opportunities are given to them that match with the goals of the
career path of the employees that they have identified. For employees, career
development workshops are also organized.
Strategic Orientation of Human Resource Function at Allied Bank
The interview was conducted with a senior HR professional of the department. First of all the
generic question was asked that whether you think your department is strategic or not? The
answer was yes we are very much strategic in nature and if it would be to quantify then we
are 80% strategic and are still trying to increase our orientation. The HR head has
representation in the board of directors and their input is considered very important.
According to the input given by them the decisions are taken at the spot accordingly. This
showed that they have an integrative linkage present.
Although it is the policy of the State Bank that on one position a person cannot stay longer
than three years until it has been specially approved by the President of the bank. In Allied
Bank, the HR head is on this position for almost 6 years as it is the impression that the
department is performing very well under him. He has brought the concept of automation in
the department. He has introduced high tech softwares for different HR functions. Like OLM
5 for the purpose of compensation, MNP (manpower planning) for the forecasting purposes,
AMNOST 24 for the purpose of checking the customer satisfaction, Specialized APR (annual
performance review) is used for performance appraisals and many others like that.
21

When asked about the consistency of organizational culture across different branches then
they were of the view that we have automated our system to that extent that a branch located
in a small unknown village will have the same system as a branch operating in a well-known
city.
Through the vast extent of automation, many tasks have been devolved to line but there are
still tasks that are still centralized like the hiring, firing of employees and deciding on the
compensation of the employees. The HR is satisfied with the work line is doing. The
privatization of the bank happened in the year 2005-2006, and it is believed that after this the
bank has improved a lot and has also taken a lot of initiatives to become strategic, as
automation was brought by the new management and now all of the employees are of the
view that for an organization and especially a department to be successful automation is very
necessary

Analysis:
The factors in the model presented have been observed in both the banks to some extent.
Now the question rises about the intensity of their relationship and is the mere presence
making the HR function strategic or not or as pointed out in the literature that whether the
organizational performance and effectiveness have reached to optimum level.
In Askari Bank even though the HR head is not present in BOD but have direct reporting link
to President of the Bank and moreover has a good interpersonal relations with the President.
So exploiting this factor the HR head can pose suggestions which will be heard and given
importance while formulating the business strategy. Moreover the management style of the
HR head is collaborative hence him taking aboard his department and then coming up with
policies that can be communicated to the President, where there are chances that they will be
incorporated into the business strategy. For instance the Askari Bank is going for the
expansion in the coming year, due to which increased number of staff will be employed and
handled by the HR department, thus they have started the automation of the operational work,
so that it becomes more streamlined and will not put burden on the department regarding the
operational work. Hence if devolution and automation works well for the organization then
its HR department will have time for more futuristic planning.

22

However currently devolution is done but branch managers have huge responsibility of their
operational work that sometimes they are not able to fulfil the personnel management
responsibilities up to mark and it are complying with the HR policies being made by the
department. Hence the Bank is struggling with creating a right balance between the freedom
and control over the line management. The line is given authority regarding the recruitment
and selection and transfers as they are more aware of what they require. Even though the final
authority lies with HR still, lines advice does not go unheard.
Regarding the competencies and skills of the HR department is concerned, Askari Bank lacks
in that to some extent, however the new HR head does posses skill and competencies to make
decisions which will increase the strategic orientation of the HR function. However the head
has appointed couple of months ago, so too early to say that the vast amount of information
and experience they possess about the HR functions working will be translated into sound
decision making or not.
Another factor observed in HR of Askari Bank was that it is functioning in a reactive mode
and takes decision or makes policies to cater to grievances or the problems. It has still not
taken an initiative to develop the culture or environment in a way that HR leads the
organization.
Similarly coming to Allied Bank, the factor that distinguishes it from Askari Bank is that their
HR representative is part of the Board of Directors. Thus HR has its presence at the point of
origination of strategy. HR takes parts in the formulation of the business strategy, thus clearly
shows that integrative linkage is present in Allied Bank. Overall business strategy formed has
the support of HR and hence HR designs its practices and policies accordingly.
The current HR head has been there for almost six years and has spent a lot of time; hence it
can be deduced from that perspective only that HR head does possess competency and skills
to develop a strategy which is supportive of business strategy and creating a strategic HR
function.
Another distinguishing factor between Askari and Allied Bank is that Allied has automated
vast amount of their administrative work. This not only relieves the burden of the HR
department but also streamlines the administrative activities. Automation for Allied is not
only just a requirement but a necessity for them, and that is the reason HR has state of art
information systems. These information systems allow HR of Allied Bank to easily do the
planning and organizing of the activities. Hence it can be said that the information systems
23

also help in making the HR strategic. Automaton was brought in by the current HR head,
hence we can say that even though automation was required but the Head has identified that
in coming times this will be a necessity thus futuristic planning was done at the part of the
HR department.
Common ground between Askari Bank and Allied Bank is that they have both been acquired
by corporate entities. The only difference is that Allied was acquired in 2005 and Askari Bank
in 2013. However post acquisition both the banks HR departments have transformed to a
greater degree. Their strategic orientation has increased by many folds. Before this Allied
Bank was functioning as any local, government owned entity is. Hence the transformation
occurred when the top management changed and their tone set the basis of transformation in
the organization. This transcribes that the mentality of the top management effects whether or
not they want their functions to be strategic. In both the cases the top management changed
and visible difference could be observed as the HR departments strategic orientation has
increased. Organizations leadership was an additional factor which was observed and
constant among the two organizations. It is up to the leadership that what they want and how
they want it. Another aspect through which change was brought was that after the private or
corporate enterprise have acquired these banks, there is injection of resources and they play a
vital role in bringing about the change. These resources support the organization to change
the culture and the environment and hire the competent human resource that have a vision
and will to bring about the change.

Thus competent work force contributes to the

development of strategic HR function and to some extent, when comparing from past both
the banks had hired and developed a competent workforce.
While examining the HR function through the model, it has been observed in both the banks
that the relationship of HR strategy with the culture and organizational structure was weak. It
was observed but this factor was not a very strong one as compare to other factors. Firstly in
a bank to maintain a consistent culture is a difficult as the branches and offices are
geographically spread over the regions. Even though employees have the awareness of the
basic core values of the organization but they are not shared with the same intensity
everywhere. Consistency was regarding the processes that were automated were same in
every part of the country. As the banking sector has strong SOPs that need to be followed
around all the branches strictly and often the same processes and strict SOPs are mistaken to
be consistent culture. In reality culture is much more than just the stated policies and
procedures, it is an intrinsic factor which is embedded in the workforce of the organizations
24

and mostly the HR strategy develops the culture of organization. This was however not
observed in the case of Askari or Allied Bank. In this case, mostly the customers and the bank
account holders dictate the culture. Hence it differed from branch to branch.
Secondly the organization structure was tall in both the organization and a hybrid of
centralized and decentralization. The literature pointed out that due to changing times the
organizations are becoming flatter hence there is a need for strategic orientation through
strong channels of communication, but in this case the organizations were tall but still
possessing strategic indicators, explaining that even in taller organizations HR can be
strategically oriented, even though it will have problems and mostly focus on top-down
approach.
Apart from model, the image of HR in sight of line was more or less same in both the
organizations. Line believes that HR does not get its hands dirty in the operational work and
they are not even doing strategic work. They believe that HR makes policies while remaining
in isolation, and they dont have much idea of how the daily operations are carried out.
However the HR believes that they have to take into account of all the possible factors and
then make policies. Hence there are some grey areas between HR and Line, which cannot be
categorised as to whose responsibility is where. Still HR should make efforts to take into
account all the opinions and communicate its policies well.
Both the banks dont have business partner structure and on inquiry of why they dont have
then the answer is that there is no need for it. This again exhibits their reactive nature. HR is
mostly working in the reactive mode, even though it does possess the ability to function
proactively.
The strategic HR function increases the organizational effectiveness as business strategy
trickles down to the lowest level and everyone is aware of what behaviours are expected of
them, hence individual will be acting in a way that is favourable for organization. Lack of
strategic orientation will be resulting in lack of communication of what is expected of them
and the individual will be performing without the knowledge of where he/ she are heading
and what is their contribution in the overall organization. As far as Askari Bank and Allied
Bank there was lack of communication to the lowest levels and the employees were aware of
their operational goals and what they have to achieve but they are still unaware of their
contribution to the overall goals and aims.

25

HR functions knows that what they are doing and they are trying their best to strategically
align themselves to the organization, however this has to be communicated to the lowest
levels so that everyone is playing part in organizational effectiveness.

CHAPTER 5
Conclusion and Recommendations
The model exhibits that HR strategy is reactive to the business strategy. To some extent this
was observed in the organizations, however in Allied Bank due to HR heads presence in the
BOD helps in creating an integrative linkage there.
Overall there were some strategic indicators were present in both the organizations but we
cannot say that the model taken under study was fully applicable in both the organizations.
The common was that the weak relationship with culture and structure of the organization
with the HR strategy. To some extent they be effecting each other but that was not visibly
observed in either Askari Bank or Allied Bank.
However the business strategy does affect the structure and culture of the organization, in a
way that the business strategy creates a culture. If Askari bank is undergoing expansion and
growth strategy, probably going for external growth also then the culture of the organization
has to be developed in a way that it can handle the growth well. Otherwise if structure and
culture does not support the growth then the desired results will not be able to reap.

26

Factors like top leadership and perceived image of HR were factors other than the model.
Leadership was effecting the construction of HR strategic function. As this is a tall structure
hence there is a top-down approach and in this case the change of leadership and their styles
can make a lot of difference and set the tone of whole organization. Leadership has played a
role in the development of strategic HR in both the banks.
After comparing the top leadership of the HR department of the two banks, we can also come
to the conclusion that the department head should be appointed for a longer time period as by
this they have time to not only just bring improvement in the department but also can see the
results. If something is going wrong then they can act accordingly as he is the one who has
implemented the strategy and knows it best and can remove the bug in it. This argument can
be supported by the fact that the head of HR Allied bank is there for the past six years and has
brought a lot of improvement there. We also came to know that the people in the bank were
also of the view that the head should have a broader set of knowledge meaning that he should
have some understanding of the working of the line and he should not be completely
detached from it.
The perceived image of HR is not very good in both the banks, which suggests that there is
lack of communication and link between HR and Line. This can be worked upon and
improved. Allied Banks claim to be rated well on employees satisfaction, however Askari
Bank is undergoing a process of surveying their employee satisfaction and commitment.
For both the organizations a lot has to be done to make themselves strategic. As this model
does not take into account any environment factors, but the strategic orientation will lead to
external and internal fit and this will create strategic orientation as well as increase
organizational performance along with the organizational effectiveness.
When HR is devolving some functions it should be done completely. It has been observed
that the HR still doesnt want to let go certain things completely like in Askari Bank they
have devolved the function of hiring to the line but the final authority still lies with them.
This shows that they are of the view that we have observed in literature that if HR will give
their work to line then what will HR do? So, they have still maintained some control over the
administrative work.
Strategic Orientation doe not only mean that HR is strategic with the business strategy,
however it also has to examine that how HR is complementing other functions of the business
and are they all on one page and what is HR doing to create alignment. If this is to be seen
27

there is still al long way that the HR of Allied and Askari Bank become strategic. The HR is
still mostly reactive and not proactively managing the culture of the organization which
supports the business strategy and create cohesion between all them. There are HR
representatives in different functions to assist them in both Banks but they are not very
effective.
If we have to compare Askari Bank and Allied Bank and analyse that which one of them is
having more strategic orientation then there Allied Bank will be better off. Firstly because of
their presence in BOD which is very vital while strategy formulation. Secondly Allied Bank
have already automated their administrative tasks and they have state of art information
systems supporting their HR. This is helping them in carrying out the performance appraisals
or recruitment, and along with they are able to plan their manpower by forecasting the
demand and supply. Automation leads to streamlining of activities, consistency in them is
achieved and moreover better results can be combined which will in turn assist in better
decision making. However Askari Bank has able to change themselves quickly and they are
on road create strategic fit of HR function. The current head of HR at Askari Bank had a line
background as he was previously the training head of the bank. The department was of the
view that he would be better able to lead because of his diverse background. HR also needs to
put some effort in to improving the relationship with line because all the departments need to
work in harmony with each other if they want to succeed and HR is such a department that
needs to work with every department and needs to have a good repute. In Askari Bank, efforts
were under way to improve that particular area.
Recommendations:
HR function should take more initiatives in both banks. This will help in development of
culture which will foster growth and support the business strategy. Proactive HR function will
help in anticipating problems and solving them before they make damage, or at least mitigate
the damages by preparing yourself.
Along with communication between top-tier and HR, there is need for improved
communication between HR and Line. While making policies, opinion of line should be
taken into account, as they are suppose to handle operations and they know how work is done
and what are the requirements. Similarly while implementation of a certain policy HR should
communicate that due to what reasons certain steps are taken and what will be its benefit.
Open communication lines will not only clear out misconceptions between line and HR, will
28

also explain with clarity as to what is expected of them. They will be informed that what is
the strategy and how they have to behave to achieve the desirable outcomes. Accordingly the
individuals will adjust their behaviours suiting business goals.
Development and enhancement of interpersonal relationship with the top-tier or the
executives is necessary so that HRs say is given importance. For Askari Bank they should
cash upon better relationship of Head with President and make suggestions which will
strategically align HR with business and other functional units of the Bank.
Even though this is a tall structure still opinions from lower levels should be taken into
account and their voice should be given importance. This will increase the employee
commitment and their satisfaction. Not only this they will know their contribution and will be
able to individually measure their performance.

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Exhibit 1:
Questions for Interview.
1.
2.
3.
4.
5.
6.
7.
8.

What is the structure of HR in your Bank?

What is the reporting line of HR head?
Is the HR head having representation in the BOD?
How much importance is given to the advice of HR in top circles of Management?
What is the personality of your HR head?
What is HR heads leadership style?
Does the HR possess competencies to make strategic decisions?
Does the HR head has the ability to make decisions which are strategic and is able to

plan the work accordingly?

9. What kind of culture is prevalent in their organization?
10. Is the culture shared through the organization? And how well?
11. Does the HR strategy build up the culture and environment?
12. How would you rank the strategic orientation of the Bank?
13. Is the department moving in the right direction?

32