1.

INTRODUCTION TO THE BANKING SECTOR

1.1 Banking Sector of Pakistan
The banking sector in Pakistan consists of Commercial Banks and Specialized Banking Institutions. During the quarter-1 of financial year 2004 as per SBP Quarterly report there has been robust growth in deposit mobilization and credit off take with a rise of PKR 23.1 billion in net credit to the private sector1. The banking/financial sector in Pakistan comprises of Commercial Banks, Development Finance Institutions (DFIs), Microfinance Banks (MFBs), Nonbanking Finance Companies (NBFCs) (leasing companies, Investment Banks, Discount Houses, Housing Finance Companies, Venture Capital Companies, Mutual Funds), Modarabas, Stock Exchange and Insurance Companies. Under the prevalent legislative structure the supervisory responsibilities in case of Banks, Development Finance Institutions (DFIs), and Microfinance Banks (MFBs) falls within legal ambit of State Bank of Pakistan while the rest of the financial institutions are monitored by other authorities such as Securities and Exchange Commission and Controller of Insurance2. At present there are 41 scheduled banks, 6 DFIs, and 2 MFBs operating in Pakistan whose activities are regulated and supervised by State Bank of Pakistan. The commercial banks comprise of 3 nationalized banks, 3 privatized banks, 15 private sector banks, 14 foreign banks, 2 provincial scheduled banks, and 4 specialized banks2.

1.2 State bank of Pakistan

The State Bank of Pakistan regulates the banking sector in Pakistan, mainly under the provisions of State Bank of Pakistan Act, 1956, and the Banking Companies Ordinance, 1962. Banking is too tightly monitored and controlled by
1 2

http://www.privatisation.gov.pk/finance/finance.htm http://www.sbp.org.pk/about/ordinance/supervision.htm

the SBP with the result that initiative and innovation are conspicuous by absence in Pakistani banking. A peculiar feature of Pakistani banking is its Islamic character where all the domestic local currency banking transactions since July 1985 have to be in line with Shari'ah principles, generally understood as an avoidance of interest. To accommodate and promote Islamic banking in the country new laws and amendments in existing ones have been introduced. An amendment in Banking Companies Ordinance, 1962, has given SBP the power to prohibit the banks from providing loans, advances and credits to borrowers for any purpose whatsoever on the basis of interest. Another amendment authorizes the SBP to determine the rate of interest, charges or mark-up to be applied on advances and the maximum or minimum profit sharing ratios. SBP is also competent to determine the general or specific conditions in respect of finances provided by the banks on non-interest basis. Banks are allowed to deal in Participation Term Certificates (PTCs), musharaka certificates and such other Islamic instruments as may be approved by SBP. Banks can also acquire property, trademarks and copyrights, with or without buyback arrangements with the sellers3.

1.2.1 Reform measures by State Bank of Pakistan

The State Bank of Pakistan/ Ministry of Finance has introduced the following reforms in the banking sector3:
3

The policy for opening and closing of branches has been significantly liberalized. A free-floating market driven exchange rate system has been introduced. In addition, restrictions on buying and selling of foreign exchange by banks have been removed.

Bokhari, F. State Bank and the new phase of Pakistani banking; Gulf News, Business Section (Jan 16,

2004).

The Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 was introduced in February 1997. Special banking courts have been established under this Act to facilitate the recovery of non-performing loans and advances from defaulted borrowers.

The Government has formed the Corporate and Industrial Restructuring Corporation (CIRC) to take over the non-performing loan portfolios of nationalized banks on certain agreed terms and conditions and issue government guaranteed bonds earning market rates of return. The purpose for which CIRC has been established is two-fold: 1. to concentrate recovery efforts against loan defaulters 2. to improve the profitability of nationalized banks

Appointment of independent persons to the Board of Directors of the Nationalized Commercial Banks The requirement for minimum capital of banks has been enhanced to Rs 1 billion to encourage consolidation of smaller banks. To improve the quality and reliability of reporting, the format of statutory accounts has been revised on the basis of International Accounting Standards, quarterly reporting to the shareholders has been initiated, and periodic reporting to regulators has increased. In addition, the State Bank of Pakistan has published a list of approved auditors for various sizes of banks.

Good corporate governance culture is being enforced, both by the SBP and SECP, covering directors responsibilities, improved reporting, empowerment of audit committees and internal audit and independence of external auditors.

Credit rating for all commercial banks has been made mandatory. Extension in the period of carry forward of losses to 10 years and offsetting of losses by parent company in case of acquisition is allowed. Tax rates for commercial banks have been reduced.

Tax laws have been changed to facilitate merger and acquisition of banks and financial institutions by allowing group tax loss relief.

1.3 Changes in selected banking sector indicators in 2004.

During the quarter-1 of financial year 2004, there has been robust growth in deposit mobilization and credit off take with a rise of PKR 23.1 billion in net credit to the private sector4. Billion Rupees: Table 14 Deposit Mobilization Gross disbursements Net Credit Credit to Private Sector Stock pf NPLs WA lending rates (basis points) WA deposit rates (basis points) FY 01 112.2 105.9 66.9 54.3 18.8 103 -89 FY 02 173.5 199.3 41.7 32.3 14.0 -185 -83 FY 03 275.1 387.3 133.2 167.7 -7.0 -454 -227

(Note: Negative sign indicates decline over the previous year)4

1.4 Current banking scenario in Pakistan

Overseas banking institutions in Pakistan have in recent years faced growing competition from local rivals, and many are quitting the country or partnering up. With their luxurious offices and fat salaries, foreign bankers have long been the envy of the rest of Pakistan's financial sector. They lapped up the corporate business while customers lined up to deposit their dollars in lucrative foreigncurrency accounts. Plus, foreign banks enjoyed a reputation as bastions of quality service. That seems to be changing. But look at the numbers: 5Two years ago, the 16 or so foreign banks controlled 20% of the total deposits and loans in the banking sector. Today, their share is down to 14%, and analysts say it could drop to just 3% within the next five years. Why the change? During the '90s, foreign banks profited from arbitrage and foreign-currency exchange, thanks to a fast-depreciating currency. Back then, depositors wanted to open foreign4
5

Banking Sector Indicators, SBP First Quarterly Report, 2004

currency accounts, which allowed then to earn a 5% return per year plus an additional 10% to 15% thanks to the dollar's appreciation against the battered rupee. With the rupee now stable, the U.S. dollar dropping, and Pakistan's economy stronger, the incentive to save in dollars has vaporized6. The State Bank of Pakistan, the country's central bank, has set higher minimum capital requirements for commercial banks, from 500 million rupees (just under $9 million) to 1 billion rupees (about $17.5 million), effective January 1, 2003. This has forced those foreign players with small but profitable presence in Pakistan to either seek local buyers or exit altogether6. During 2002, French bank Socit Gnrale, the UAE-based Emirates Bank Intl., and American Express (AXP) all sold out to local banks. Others, including French Credit Agricole Indosuez, the Sri Lankan Bank of Ceylon, and the Gulf- based Mashreq Bank, are all finishing deals to be bought out. ANZ Grindlays as a world wide acquisition was acquired by Standard Chartered7.

1.5 The nationalized commercial banks

So, foreign banks that were accustomed to parking massive portions of their assets in government securities and getting double-digit returns can no longer even beat inflation, which stands at around 4%8. There has been intense pressure from an unlikely corner, too. Pakistan's nationalized commercial banks, long considered inefficient, have been transforming themselves with the help of World Bank funding. These institutions have emerged as strong competition for the foreign banks9.

Banking Sector Indicators, SBP First Quarterly Report, 2004 Naween Mangi, Nationalized commercial banks, Business Week, 5/13/2003.

http://www.privatisation.gov.pk/finance/finance.htm

Profits for the National Bank of Pakistan, the country's largest bank, doubled in 2002. As local banks become more efficient, foreign banks find their market base getting smaller and smaller, until, eventually, they close up and go away9. The nationalized banks are gearing up to acquire the best information technology, traditionally the preserve of foreign banks. Habib Bank, Pakistan's No. 2 bank, will interconnect 1 million customers in 350 branches across 50 cities within the next 12 months9. The consolidation wave continued in 2003, with all but a handful of foreign banks pulling down their shutters. Citigroup, Standard Charted are likely to stay, because of their global embedding strategy. Standard Chartered continues to consolidate in Pakistan with the merger with ANZ Grindlays in 2002. HSBC (HBC) also maintains a small operation in the country and hasn't announced any intentions of exiting10.

1.6 Recent trends in the Banking Sector

The key trends in the banking sector are as follows11: Increased Merger & Acquisition activity in the banking sector with local private banks having made several domestic acquisitions. An example of this can be seen from the merger between Standard Carted and Grindlays in the year 2002. Large expansion of branch network and deposits by private and some foreign banks. Standard charted has recently announced to open 28 new branches all over Pakistan. Not only this, Askari Commercial Bank, Union Bank and Habib bank are opening their branches in the rural areas to reach to the public.
9

Rationalization of branches by nationalized banks

http://www.highbeam.com/library/doc0.asp?docid=1G1:14649214&refi http://www.pakistaneconomist.com/issue2000/issue3/f&m.htm 11 http://www.privatisation.gov.pk/finance/finance.htm

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Increased focus towards consumer finance Increased focus on attracting local rupee deposits Increased emphasis towards automation and customer service. All the leading banks have formed Customer Relationship Management departments in order to retain their customer base.

After going through a detailed analysis of the banking sector of Pakistan, the report focuses on the Recruitment and Selection procedures at two main banks in Pakistan: Askari Commercial Bank (local bank) and Standard Charted Bank (foreign bank) to see how the practices differ from each other.

2. LITERATURE REVIEW
Finding the right person for the job has always been important and the decision to appoint an individual is one of the most crucial an employer will ever take. This is

particularly true in the light of the HRM notion of people as competitive advantage; indeed, Beaumont (1993) identifies three themes in the HRM literature which appear to have enhanced the potential importance of the selection decision in individual organizations in the current operating environment. First demographic trends and changes in the labor market have led to a less homogeneous work force which has placed increasing pressure on the notion of fairness in selection. Secondly, the desire for a multi skilled, flexible workforce and an increased emphasis team working has meant that selection decisions are more concerned with behavior and attitudes than with matching individuals to immediate job requirements. And third the link between corporate strategy and HRM has lead to the notion of strategic selection, i.e.-e a system that links selection to the overall organizational strategy that aims to match the flow of personnel to emerging business strategies12. Recruitment of good employees is a key survival issue in business today. All across the country it is difficult to hire good people today. The market is very tight, especially for entry-level jobs. Thus there is a need to think differently about how to source good candidates12 Recruiting is a lot like marketing. Because organizations are marketing jobs to people and they need to think about what is their target customer. Organizations need to think if there is another way to look at the ideal employee for the business. Organizations need to identify all the appropriate target markets for recruitment such as older persons. Then they need to use targeted messages and targeted activities to reach those people12. In recruitment a very important question to answer is how the organizations can attract those individuals

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HUMAN RESOURCE MANAGEMENT IN CONTEXT By Helen Newell, 1st edition.

There are two kinds of job seekers: 1) motivated, i.e. unemployed, desperate for a job, and 2) window shoppers who already have a job. Most newspaper ads attract the motivated job seeker, as opposed to ones happily employed13. The importance of recruitment and selection in an HRM environment is further supported by the empirical evidence. A study of HRM in 15 organizations (Storey, 1992) found that a number of the case companies had introduced initiatives promising more systematic selection and some were trying to test for appropriate attitudinal and behavioral characteristics. Even the companies that had not introduced initiatives promising more systematic selection claimed to be addressing selection with a new seriousness13.

2.1 What is Recruitment?

In current work environment, businesses that want to stay ahead of the game have recognized the importance of running an efficient, high-performance organization. Building such an organization depends on choosing candidates who are best suited to the organizations specific needs. Now the question is how can the organization ensure that they are selecting the best? By casting a wide net in the recruiting activities--and tapping into the hidden workforce. During these times of restructuring, budget cuts, and hiring freezes, HR executives and hiring managers are focused on implementing recruiting strategies that maximize their resources. A strategy that is cost effective, yet able to deliver quality candidates in a timely manner, is the goal. Recruitment involves seeking and attracting a pool of people from which qualified candidates for jobs vacancies can be chosen13. Or Recruitment activities help to increase the pool of candidates that might be selected for a job. Most organizations have a recruitment function managed by the Human resource Department. In the era when the focus has been on

efficiently and effectively running the organization, recruiting the right person for the job is a top priority. If the forecasted human resource requirements exceed the net human resource requirements the organization usually actively recruits new employees. However organizations do have options other than recruiting new employees to accomplish the work. Some of these options include using temporary workers, offering over time to existing employees, subcontracting the employees and leasing of employees13. JOB ANALYSIS, HUMAN RESOURCE PLANNING AND RECRUITMENT: Figure 113

Job Analysis Nature and requirements of specific jobs

Human Resource Planning Number of specific jobs to be filled

Recruitment

Sources? How are qualified candidates to be recruited? Recruiters?

Pool of qualified applicants Selection

The above diagram illustrates the relationships among job analysis, human resource planning, recruitment and the selection process. Job analysis gives the nature and requirements of specific jobs. Human resource planning determines the specific number of jobs to be filled. Recruitment concerns providing a pool of people qualified to fill these vacancies. Questions that are addressed in the
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Human Resource Management by Gary Dessler, 7th Edition

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recruitment process include: What are the sources of qualified personnel? How are these qualified personnel to be recruited? And who is to be involved in the recruiting process? The selection process concerns choosing from the pool of qualified candidates the individual or group of individuals most likely to succeed in a given job

2.2 When should recruitment research be used?

Direct sourcing of employed executives from competitors. Organizations basically hire from the competitors because they have an insight into their policies and future strategies14.

Affordable executive recruitment. The recruitment research creates a pool of well qualified individuals. Only those individuals that are very best in the field are selected and are given executive positions. So recruitment procedures make sure that the very best are selected at very minimum expenditures14.

An immediate hire due to an unexpected loss of an executive. This can be justified by the fact that often organization employees refer candidates and no costs are incurred in terms of advertising etc14.

Quantifiable and justifiable results Multiple hires from a single search. When a pool of candidates is created, it is not necessary to hire only one individual. Multiple hires can be made if jobs are available14.

Customized search work. Fixed and predictable cost to fit your budget constraints. When ever the recruitment process is conducted by an organization all the costs are documented and approved by the authorities. So as such there are no hidden costs involved15.

Recruitment research can be used to replace an executive who left your firm15.

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Multi-city searches or searches in unfamiliar locations. Searches that require a quick ramp-up period.

2.3 The systematic approach to recruitment and selection

The key stages of a systematic approach include15

2.3.1 Define the Job

The traditional approach involves writing a comprehensive job description of the job to be filled. This enables the recruiter to know exactly what the purpose, duties and responsibilities for the vacant position will be and its location within the organization structure. The need for greater flexibility has led a number of organizations to replace the traditional job description with a concise list of bullet points or accountability statements often limited to a one-sheet paper15.

2.3.2 Define the Person

The traditional approach involves drawing up a personnel specification based on the job description, which identifies the personal characteristics required to perform the job adequately. Under the HRM banner there is greater emphasis on securing people with the right behavior ad attitudes rather than focusing on immediate job requirements15.

2.3.3 Agree Terms and Conditions

Decisions on terms and conditions are made at various points in the process. Some of these are often not negotiated (for e.g. hours and rewards) until the final selection stages. There is a case for deciding the salary and other elements of the reward package before attracting candidates15.
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2.4 Attracting Applicants 2.4.1Recruitment methods

A wide variety of recruitment methods are available and they have their advantages and disadvantages. The resources available will influence the most appropriate method for any particular vacancy, the level of the post and its importance within the organization16.

2.4.2 Design of advertisements

The most popular formal recruitment method is press advertising. Effective communication from the employer to potential applicants requires thought and skills and many organizations use the services of a recruitment agency for the design of the advertisement and advice on the most effective media. The aim of the advertisements is to attract only suitable candidates and therefore it would discourage those who do not possess the necessary attributes while, at the same time, retaining and encouraging the interest of those who are suitable16.

2.4.3 Recruitment documentation

The response of the organization should be indicative of the overall image the organization wishes to project. Some organizations prepare a package of documents, which may include the job description, the person specification, information about the organization, the equal opportunities policy; the rewards
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Human Resource Management by Ian Beardwell and Len Holden

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package available and possible future prospects. Some give candidates the opportunity to discuss the position with an organizational representative on an informal basis16.

2.5 SOURCES OF QUALIFIED PERSONNEL

An organization may fill a particular job either with someone already employed by the organization or with someone from outside. Each these sources have advantages and disadvantages.

2.5.1 Internal sources

If an organization has been effective in recruiting and selecting employees in the past one of the best sources of talent is its own employees. This has several advantages. First the organization has a general idea of the strength and weaknesses of its employees. If the organization maintains a skills inventory, it can use it as a starting point for recruiting from within. In general, more accurate data are available concerning current employees, thus reducing the chance of making a wrong decision. Not only does the organization know more about its employees but also the employees know more about the organization and how it operates17. Another advantage is that recruitment from within has a significant, positive effect on employee motivation and morale when it creates promotion opportunities or prevents layoffs. When employees know they will be considered for openings they have an incentive for good performance17. A final advantage relates to the fact that most organizations have a sizable investment in their work force. Full use of the abilities of the organizations employees improves the organizations return on its investment18.

17

www.lg-employers.gov.uk/ recruit/guide/attracting/sources

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However they are disadvantages of recruiting from within. One danger associated with promotion from within is that fighting for promotions can become overly intense and have a negative effect on the morale and performance of people who are not promoted17. Two major issues are involved if an organization promotes from within. First the organization needs a strong employee and management development program in order to ensure that its employees scan handle larger responsibilities. The second issue concerns the desirability of using seniority as the basis for promotions17.

2.5.1a Job posting and bidding

It is an integral method of recruitment in which notices of available jobs are posted in central locations through out the organizations and employees are given a specific length of time to apply for the available jobs. Normally the job notice specifies the job title, rate of pay and necessary qualifications18.

2.5.2 External Sources

External recruiting is needed in organizations that are growing rapidly or have a large demand for technical, skilled or managerial employees. One advantage of recruiting from outside is that the pool of talent is much larger than that available from internal sources. Another advantage is that employees hired from outside can bring new insight and perspectives to the organizations. One disadvantage of external recruitment is that attracting, contacting and evaluating potential employees is more difficult. A second potential disadvantage is that employees hired from the outside need a longer adjustment or orientation period. This can cause problems because even jobs they do not appear to be unique to the organization require familiarity with the people, procedures and policies of the organization in which they are performed. A final problem is that
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Human Resource Management by Gary Dessler, 7th Edition

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recruiting from out side may cause morale problems among people with in the organization who feel qualified to do the jobs19.

2.5.2a Advertising
One of the most widely used methods of recruiting is job advertising. Job advertising is the replacement of help wanted advertisements in daily newspapers, in trade and professional publications or on radio and television19.

2.5.2b Employment agencies

Both public and private employment agencies can be useful in recruiting new employees. This is because people from different cities, colleges and universities who have specialized in various disciplines submit their resumes with these agencies. Therefore whenever the organizations are looking for employees they can contact these agencies. Thus in this way they have more choice available to them for the selection of employees19.

2.5.2c Employee Referrals

Many organizations involve their employees in the recruiting process. These recruiting systems may be informal and they maybe structured with definite guidelines to be followed. Incentives and bonuses are sometime given to employees who refer subsequently hired people. One drawback to the use of employee referral is that differences may develop within the organization because employees tend to refer only friends or relatives20.

2.6 Effectiveness of the recruitment methods

19 20

http://www.kirkleesmc.gov.uk/employment/jobsinfo/advertisements.shtml http://www.csuhayward.edu/ODEO/ttads.html

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Organizational recruitment programs are designed to bring a pool of talent to the organization. From this pool the organization hopes to select the persons most qualified for the job. An obvious and very important question faced by human resource departments is which method of recruitment supplies the best talent pool. Many studies have explored this issue. One study concluded that employee referrals were the most effective when compared to newspapers advertisements or private employment agencies. The study found that turnover rate for employees hired from employee referrals were lower than employees hired from other methods21. Another study examined the relationship among employee performance, absenteeism and methods of recruitment. This study showed that employees recruited through newspaper were lower in performance than individuals who made contact with the company on their own initiative or through a professional journal. Generally it is safe to say that research has not identified a single best source of recruitment. Thus each organization should take steps to identify its most effective recruitment sources21.

2.7 Assessing Candidates

Once recruitment has identified the sources of candidates, the focus now shifts to the selection and the next stages concentrate on assessing the suitability of the candidates.

2.7.1Short listing

21

http://www.methods.co.nz/prs/about.html

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As economic conditions and technological developments are likely to lead more people chasing fewer jobs across the employment spectrum, it is increasingly the norm of the organizations to receive more applicants then they can reasonable interview. Thus the initial step in selection is to categorize candidates as probable, possible or unsuitable. This is done on the basis of the information provided on the applicant form or resume against the predetermined selection criteria. The criteria may either be explicit, i.e. detailed on the personnel specification, or implicit, i.e. only in the mind of the person doing the short listing22. Short listing is the process by which selectors match the information given on the application form with the requirements of the job, using the agreed job description and person specification. The short-listing exercise must be carried out as soon as possible after the closing date and should be undertaken by at least two people and these should be the same people with regard to all applicants to ensure consistency in the process22. Applicants should demonstrate that they meet at least the essential criteria set out in the person specification. Simply stating I have excellent IT skills is not sufficient and an applicant would be expected to explain what IT skills they have. The same criteria should be applied to all applicants. This means that if one person is not short listed because they do not meet one of the essential criteria, all other applicants who also do not have that essential criterion must not be short-listed22. The selectors should not impose an arbitrary limit on the shortlist but should have regard as to whether or not candidates meet the essential criteria for the post. Where a large number of candidates meet the essential criteria, the desirable criteria may be applied to reduce the interview field to a manageable number. Similarly candidates should not be short listed for interview to "make up the numbers", they should only be invited if they meet the criteria for the post. There
22

http://www.hr.soton.ac.uk/PandP/recruitment_code.asp

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should be no artificial restrictions on the number of applicants from any minority group when short-listing. If after short listing using the essential and desirable criteria, the short listed pool is still too large to interview, it may be necessary to conduct some tests or conduct some preliminary informal interviews in order to reduce the number of candidates23.

2.7.2 Selection Methods

A number of selection methods are available and a selection procedure will frequently involve the use of more than one method23.

2.7.2a Interview
This is far by the most popular selection method and is described as a closed conversation with a purpose. Interviews are usually conducted face to face, although some organizations are now using telephone interviews as a part of their selection procedure. The number of interviews involved in the selection process is frequently determined by the status of the vacancy. Survey data has found that majority of the organizations use two or more interviews for managerial and graduate posts, but used single interviews for clerical and manual requirements23.

2.7.2b Tests
Testing is generally an attempt to achieve objectivity or to put it more accurately to reduce subjectivity in selection decision-making. The main types of tests used for selection are attainment tests, aptitude tests, intelligent tests and personality
23

www.mdx.ac.uk/policies/docs/hrps7.pdf

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questionnaires. Tests can be used as part of the selection process to assist with the decision making process. It is not always possible to test whether an applicant meets certain essential criteria from the application form and interview alone. A good example of this is where a candidate is required to have a certain level of competence at typing or word processing to be able to do the job. The candidate may state in the application form that they can type well and may back this up at interview. Similarly formal presentation skills can only be measured to a certain point at interview, and asking candidates to complete a short presentation will give the recruiters a better assessment of the candidates competence in this area. Other tests include24: Written tests: to measure written skills (e.g. grammar, ability to write reports/letters etc. These can also be used to measure a candidates knowledge of an area related to the job Case studies: to measure how candidates will react to certain situations, e.g. financial interpretation tests for Finance staff, how to react to specific difficult scenarios for Personnel staff, Counseling staff etc, drawing up training events for Staff Development staff etc Personality tests: to measure for specific personality traits Ability tests: to measure specific abilities, such as verbal and numerical comprehension Group exercises: to measure interpersonal skills, leadership skills and so on. Skills tests: to measure specific skills required for the job, e.g. typing tests for clerical staff, operating certain machinery for manual staff etc
24

www.mdx.ac.uk/policies/docs/hrps7.pdf-569/lp

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Presentations: to measure an applicants oral communication and presentation skills. A presentation can also be used to assess a candidates knowledge of an area related to the job

Armstrong (1991) lists four characteristics of a good test25: 1. It is a sensitive measuring instrument that discriminates well between subjects. 2. It has been standardized on a representative and sizeable sample of the population for which it is intended so that any individuals score can be interpreted in relation to others.

3. It is reliable in the sense that it always measures the same thing. A test aimed at measuring a particular characteristic should measure the same characteristic when applied to different people at the same time, or to the same person at different times.

2.8 References
References should be obtained for all short listed candidates (including internal candidates) before the interviews take place, unless a candidate has indicated on their application form that they do not wish referees to be approached at this stage. Referees should be sent a copy of the job description and person specification for their information and assistance. This will enable informed
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HUMAN RESOURCE MANAGEMENT AND PERSONNEL MANAGEMENT By William B. Werther, 5th edition

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comments and opinions to be provided about the candidate's ability to perform the duties of the job in question. More relevant detail can be obtained from referees if specific questions are asked concerning a candidate's ability to carry out the job. If specific questions are not asked then caution should be exercised in accepting references at face value26.

2.9 Assessment centers

An Assessment Center can be defined as "a variety of testing techniques designed to allow candidates to demonstrate, under standardized conditions, the skills and abilities that are most essential for success in a given job" (Coleman, 1987). The term "assessment center" is really a catchall term that can consist of some or all of a variety of exercises. Assessment centers usually have some sort of in-basket exercise, which contains contents similar to those, which are found in the in-basket for the job, which is being tested. Other possibilities include oral exercises, counseling simulations, problem analysis exercises, interview simulations, role-play exercises, written report/analysis exercises, and leaderless group exercises (Coleman, 1987; Filer, 1979; Joiner, 1984). Assessment centers allow candidates to demonstrate more of their skills through a number of job relevant situations (Joiner, 1984)27. An Assessment Center consists of a standardized evaluation of behavior based on multiple evaluations including: job-related simulations, interviews, and/or psychological tests. Job Simulations are used to evaluate candidates on behaviors relevant to the most critical aspects (or competencies) of the job27. Several trained observers and techniques are used. Judgments about behavior are made and recorded. These judgments are pooled in a meeting among the
26 27

www.uvm.edu/humanresources/ ?Page=recruitmentguide/quick_reference.html

www.redgoldfish.co.uk/cvinfo/centers.asp

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assessors or by an averaging process. In discussion among assessors, comprehensive accounts of behavior, often including ratings, are pooled. The discussion results in evaluations of the performance of the assesses on the dimensions or other variables27.

2.9.1 Leaderless Group Discussion

A. The leaderless group discussion is a type of assessment center exercise where groups of applicants meet as a group to discuss an actual jobrelated problem. As the meeting proceeds, the behavior of the candidates is observed to see how they interact and what leadership and communications skills each person displays (Schultz & Schultz, 1994)23. B. Problems with this technique: 1. This type of exercise is not feasible for selecting candidates from a potential applicant pool of individuals because of the time and cost involved with training the individuals rating the applicants. 2. Since every group would be different, individuals could argue that the process is biased or unfair. 3. The process is not standardized28.

2.9.2 Role Playing

A. Role-playing is a type of assessment center exercise where the candidate assumes the role of the incumbent of the position and must deal with another person in a job- related situation. A trained role player is used and responds "in character" to the actions of the candidate. Observing raters assesses performance. B. Problems with this technique: 1. Since this technique is not conducive to group administration, test security would be an issue23.
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http://www.hr-guide.com/data/G318.htm

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Job content areas identified in the job analysis were not as amenable to this type of exercise as they were to the selection techniques utilized in the final test. Assessment centers techniques are most often used for the selection of managers and graduate trainees. Their use is increasing; survey data suggests that they are now in use in 30% of organizations23.

2.10 Making the decision

The aim of the overall recruitment and selection process is to provide enough information to enable recruiters to differentiate between those who can do the job and those who cant. The perspective approach stresses that the final decision should involve measuring each candidate against the selection criteria defined in the person specification and not against each other. The combination of a number of different selection methods can enhance the quantity and quality of information about each candidate29. The contemporary situation and employers increased desire for flexibility might affect even the decision-making process.

2.11 Evaluation
The final stage of the recruitment and selection process concerns measurement of its success, both qualitatively and quantitatively. Research suggests that any recruitment and selection process should be based on three fundamental principles: effectiveness, efficiency and fairness. Effectiveness is concerned with distinguishing accurately between suitable and unsuitable candidates. Efficiency is more concerned with the costs of the exercise, and measures here may include costs average cost per recruit, average time lapsed between various stages, percentage of offers made and offer acceptance rate. Fairness is concerned with dealing with all applicants fairly and honestly, but has often been
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A Handbook of Human Resource Management Practice by Michael Armstrong

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taken to refer to equal opportunity monitoring and has been limited to record keeping on the gender and ethnic origin30.

3. RESEARCH METHODOLOGY
3.1 Research
Research is an active, diligent and systematic process of inquiry in order to discover, interpret or revise facts, events, behaviors, or theories, or to make practical applications with the help of such facts, laws or theories. The term "research" is also used to describe the collection of information about a particular subject31

30 31

The HR Value Proposition,Dave Ulrich, Wayne Brockbank

en.wikipedia.org/wiki/Research

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Research by no means is an invention of the modern day researchers. Although the form used by many social scientists today might be less than 150 years old, and in some special forms even younger, as a tool of gaining knowledge and of gathering information, research has been used extensively for more than 2000 years31. During the 17th and the 18th century serious research was undertaken by the social philosophers to discover regularities in social and economic phenomena. Research, today is used by people all over the world to find out relationship between variables and to formulate new theories31.

3.2 Types of research

Several research models have been introduced and are practiced by researchers all over. The diverse practices and uses of research are show below

3.2.1 Quantitative research

This refers to the type of research that is based on the methodological issues of neopositivisim and positivism, and adheres to the standards of strict research design developed before the research begins. It involves quantitative measurement and use of statistical analysis32.

3.2.2 Basic research

This research is usually employed for the purpose of gaining knowledge that will advance our understanding of the social world. It may also help in rejecting or supporting existing theories about the social world32.
32

Srantakos S., Social Research, PALGRAVE, Newyork, 1997.

26

3.2.3 Applied research

This type of research is directly related to social and policy issues and aims at solving specific problems and establishing policy programs that will help to improve social life in general and specific conditions in particular32.

3.2.4 Longitudinal research

It involves the study of a sample on more than one occasion. Versions of this type of research are panel studies and trend studies32.

3.2.5 Qualitative research

This type of research refers to a number of methodological approaches, based on diverse theoretical principles, employing methods of data collection and analysis that are non-quantitative and describes reality as experienced by the respondents32.

3.2.6 Descriptive research

This form of research is quite common, in most cases as a preliminary study or an explanatory study, but also as an independent investigation. It aims to describe social systems, relations or social events and providing background information about the issue in question32.

3.2.7 Classification research

27

The aim of this research is to categorize research units into groups to demonstrate differences, explain relationships and clarify social events and relationships32.

3.2.8 Comparative research

In this type of research, the researcher is interested in identifying similarities or differences between units at all levels. The comparative approach to the study of society has a long tradition dating back to Ancient Greece.

32

Srantakos S., Social Research, PALGRAVE, Newyork, 1997. Since the nineteenth century, philosophers, anthropologists, political scientists and sociologists have used cross-cultural comparisons to achieve various objectives. Comparative research, simply put, is the act of comparing two or more things with a view to discovering something about one or all of the things being compared33.

3.2.9 Exploratory research

This research is usually undertaken when there is not enough information available about the research subject. In certain cases it is undertaken in order to provide a basis for further research, for example to define certain concepts, to formulate hypotheses or to operationalise variables33.

3.3 Type of research used for the research paper

The history of case study research is marked by periods of intense use and periods of disuse. The earliest use of this form of research can be traced to
33

http://en.wikipedia.org/wiki/Comparative_research

28

Europe, predominantly to France. Case studies can be single or multiple-case designs, where a multiple design must follow a replication rather than sampling logic34. This is a case study based research paper. In order to properly understand how the recruitment and selection procedures are applied at various organization the researcher has taken Askari Commercial Bank and Standard Charted bank as a case for application of the procedures and for an in dept analysis. The researcher in order to obtain a complete picture has applied a variety of methods, which include interviews, organization based studies and observation. Interviews are one of the most important sources of case study information. There are several forms of interviews that are possible: Open-ended, Focused, and Structured or survey. In an open-ended interview, key respondents are asked to comment about certain events. They may propose solutions or provide insight into events. They may also corroborate evidence obtained from other sources. The researcher must avoid becoming dependent on a single informant, and seek the same data from other sources to verify its authenticity35. The focused interview is used in a situation where the respondent is interviewed for a short period of time, usually answering set questions. This technique is often used to confirm data collected from another source. For the purpose of this research paper open ended questions were asked from the respondents36.

This research paper is based on qualitative research.

37

All research ultimately

has a qualitative grounding. This paper is based on qualitative research, as the aim of the analysis is a complete and detailed description. The data collected by the researcher is in the form of words, pictures and objects. It is not in the form of numbers and statistics as in quantitative research. The researcher has conducted

34 35

http://www.nova.edu/ssss/QR/QR3-2/tellis1.html Srantakos S., Social Research, PALGRAVE, Newyork, 1997. 36 http://www.nova.edu/ssss/QR/QR3-2/tellis1.html 37 Donald Campbell

29

analysis of data such as words (e.g. from interviews), pictures and objects. The report does not involve analysis of numerical data.

3.4 Data collection methods

The data collection methods include Interviews from managers of the organizations: Managers from both the organizations were interviewed to in order to get information about the recruitment and selection procedures followed by the organization. Primary and secondary research: Primary information was collected by conducting interviews from employees and secondary information was collected from articles published in the newspaper and magazines. A part from that information was also collected from various HRM books.

Articles from the Internet websites: Information was collected from various articles on Recruitment and Selection procedures that are available on the websites.

3.5 Hypothesis development

A hypothesis can be defined as a logically conjectured relationship between two and more variables expressed in the form of a testable statement. Relationships are formed on the basis on the basis of a network associations established in the theoretical framework formulated. The purpose of formulating a hypothesis is to offer a clear framework and a guide when collecting, analyzing and interpreting the data. In many cases hypothesis serves as a testing tool of the relationships between the variables. In this sense, a hypothesis contains a possible solution to

30

the research problem and is expected to be verified or falsified by the evidence gathered by the study38, Hypothesis can be in any form except in the form of a question. They are generally translations of the research questions and can be generated in many ways. They can be developed for instance through existing theories, they can be based on social policy, research findings of other studies or from the intuition or findings from exploratory studies especially designed for this purpose36. For this research paper the researcher has formulated two hypotheses, which would provide a clear framework and a guide when collecting, analyzing and interpreting data. H 1: A well-designed Recruitment procedure plays an important role in effective Human Resource Management of an organization. H 2: An effective Selection process plays a significant role in the placement of employees in the organization.

38

Research Methodology, Reference book, 6th semester

31

4. RECRUITMENT AND SELECTION PROCEDURES AT ASKARI COMMERCIAL BANK

4.1 Brief introduction of the organization
Askari commercial bank limited was incorporated as a public ltd company on October 09, 1991 and is listed on the Karachi Lahore and Islamabad stock exchanges. The bank obtained business commencement certificate on February 26, 1992 and started operations on April 01, 1992. Askari commercial bank is a scheduled commercial bank and is particularly engaged in the business of banking as defined in the banking companies ordinance 199239. Askari commercial bank is providing the best possible facilities and services to its customers through the use of latest technology. All the branches of Askari commercial bank have been computerized and avenues of further applications of technology are being explored by a highly competent team of experts39. Askari commercial bank is the first bank to have established countrywide communication network based on satellite systems and radio modems. It has the largest satellite based communication network in the banking sector in Pakistan. The sophisticated communication network has enabled ACBL to provide real time
39

http://www.askaribank.com.pk/

32

on-line banking facilities to its customers throughout its 21 on-line branches. Presently no other bank is offering the same level of sophisticated services in Pakistan. The bank also offers countrywide online self-service banking to its customers. It is the only bank in Pakistan to provide this facility39. Askari commercial bank has installed 8 ATMs at various points throughout the country in order to facilitate funds transfer and provide deposit facility. It is the only bank to have achieved the unique distinction of providing the facility of avoiding cutoff time for branches thus enabling availability of high quality services. It also provides fully automated on-line telephone banking facility in order to answer the inquiries made by the customers. The bank maintains the facility of electronic image of account holders signatures throughout its branch network to provide better service to its customers. Furthermore the bank has established a fully automated system for calculating profits on time deposits and interest rates, which ensures better accuracy and efficiency40. The bank uses its communication network on real-time basis to broadcast the forex rates. This enables the bank to instantly adjust its rates according to their movements in the market. Most of the software used by Askari commercial bank is developed by a team of very competent Askari software developers40. Askari commercial bank has a very high profile agenda for the application of technology. This is either under implementation at present or will be implemented in the future. It includes the internet banking facility, corporate e-mail set-up using banks private communication network and image based archival system for documents which will be accessible throughout the country. This will ensure automation at all levels reducing the manual work to minimum an in the final analysis prepare the bank to face the challenges of the 21st centaury with an advanced technological base unmatched by any other bank in Pakistan40.

40

www.askaribank.com/index_files/title.htm

33

Despite the recent lackluster performance of the economy in Pakistan, Askari Commercial Bank Limited (ACBL) has managed to outperform its competitors and maintain its growth momentum40. The bank has received an A1+ rating for the short term (which is the highest in the category) and an AA for the long term, from the Pakistan Credit Rating Agency (Pvt) Ltd. (PACRA), an affiliate of IBCA Ltd. UK. ACBL is the first Private Sector Pakistani Bank to voluntarily obtain a rating from PACRA40. . Askari Commercial Bank Ltd. is one of the first Private Banks in Pakistan to offer innovative products and services to its customers like 24 hour Telephone Banking. This enables the customers to Bank round the clock from the comfort of their homes41. The bank has been quick to introduce ATM (Automated Teller Machine) Services to the customers. Electronic cash dispensing facilities are now available at major centers like Karachi, Lahore and Rawalpindi. All these ATMs are linked through a state-of-the-art Satellite based Communications System offering real-time 24 hour service. In due course of time, they plan to install more ATMs and extend this on-line facility to other operating centers of the Bank42. Askari Commercial Bank is the only Private Sector bank that has been approved by the World Bank as a Participating Financial Institution for the US$ 200 million Line of Credit sanctioned to the Government of Pakistan for the Financial Sector Deepening and Intermediation Project42. Askari Bank is operating with 36 branches located throughout Pakistan. Most of the branches are connected through our State of the Art, On-line Communications Network, which gives the bank a competitive edge in providing
41

www.askaribank.com/index_files/title.htm nation.com.pk/daily/jan-2005/9/bnews6.php

42

34

instant services to its clientele. They also offer direct access to the latest Foreign Exchange Rates through our Online Communications System42.

4.2 Human resource Department

Strategically, perhaps the most important division at the banks head office is HRD, which is responsible for HRM, including recruitment, staffing, training and evaluation. The division also handles the matters relating to administration43. The department basically operates on a future oriented strategy focusing on employees personal and professional growth. Staff development activities are geared to enhance their capabilities for applying the knowledge and facts towards development of practical solutions. Under its HRM policy, Askari bank develops and grooms management personnel for positions of greater responsibility with analytical, interpersonal, conceptual and specialized skills to enable them to understand the cause-and-effect relationship and to think logically43. Staff is given on-the-job as well as off-site training in diverse areas of banking and management. Askari banks hiring policy is based upon meritocracy and selecting the right person for the right job. It lays greater emphasis on employee honesty and
43

Manager, Human Resource Department

35

integrity besides technical competence and, candidates are selected through well defined and systematic selection procedures43. The department does the work force planning every year. They collect data every year in order to know about the personnel requirement and then the make the HR budget accordingly. The recruitment plan is basically made for one year43. The following study is based on the Credit division. The report basically defines the procedures that are followed by the HR department for the selection of employees for the Credit division43.

4.3 Credit Division

The basic purpose of the credit department is to provide extensive support to branches for credit administration, control and monitoring, the division has played a pivotal role in helping the bank achieve a remarkable loans growth of 31%, with well-diversified risk exposures. Most of the loans are for short-term trade financing on a secure and self-liquidating basis. The division has a special assets management team, which is responsible for ensuring low ratio of bad debts, effective monitoring of delinquent advances and close follow-up recoveries. Banks head office credit committee (H.O.C.C) reviews the credit quality and pricing on a regular basis not only to ensure healthy credit growth but also the management of banks risk assets in a most prudent and profitable manner44. Taking into account the expanding branch network and the increasing customer base, credit administration was strengthened by decentralizing the delegation of lending authorities at the regional and area management levels44. The de-centralization has benefited the bank and the customers tremendously as the new arrangement now provides for faster credit delivery, focused credit
44

Manager, Credit Division

36

development, and more effective monitoring and controls. Further steps are being taken to streamline credit appraisal procedures and training to credit officers at all levels44. As a strategic move, the bank averted large group exposures re-allocated its resources to businesses, which are promising, dynamic and upcoming. The move also includes extension of credit to small & medium sized enterprises and farm financing44. Now as said before, the human resource department performs the recruitment and selection procedure. So once the HR department realizes that the department has a job vacancy that needs to be filled the recruitment procedure begins.

37

4.4 The prerequisites to the Recruitment process

There are a few distinctive steps that are taken before the department begins with the actual recruitment process. Those are commonly called the prerequisites of the recruitment process. These are Job descriptions Job analysis Job specifications

Designing the job and determining the specifications for it enables the recruiter to know exactly what the purpose, duties and responsibilities for the vacant position will be and its location within the organization structure. The HR department prepares these job descriptions along with the department heads of the particular departments, so that a detailed job description is made that would again help the organization to select the right person for the job45. The job description questionnaire includes the following data45:
45

Job title Department Qualifications

Manager, Human Resource Management

38

Job summary (lists the more important or regularly performed tasks) Reports to (to whom the person should report) Supervises Job duties (briefly describe for each duty what the employee does and how employee does it) o Daily duties o Periodic duties (indicate weekly, monthly, quarterly, etc.)

Once the job descriptions are made they are viewed on a continuous basis for necessary modifications. When ever a job vacancy has to be filled the management goes over the job description etc. to find out the actual requirements of the job. The management develops these job descriptions after conducting a thorough job analysis which examines the tasks and sequences of tasks necessary to perform the job. The analysis usually looks at the areas of knowledge and skills needed by the job. Job specifications at Askari Commercial Bank usually takes the job description and answers the question of what skills, qualification and experience are required to do the specific job. Once the department is done with all these things then the actual recruitment procedure begins.

4.5 Internal Recruitment

When ever a vacancy has to be filled the management first looks for an employee who is already working in the organization. In this way we see that the organizations first preferences are the employees who are already working for the organization. The management believes that since the employees have been working with the organization for a long time they know about the culture of the organization. More over they are aware of the policies and procedures and thus find it easy to adjust in the new job. The other reason which the management

39

gives for internal recruitment is the information that they have about the employees. They know about the employees skills, knowledge, capabilities and his weakness therefore it is easier to train the employees accordingly. If a job is available, the department makes a notice, which has the following information46 Job/post Education Experience required Skills(if necessary) Pay(occasionally)

The notice is circulated through the entire organization and it is also posted on the notice board so that employees know about the job and can apply for it. This shows that for internal requirement the organization relies on job posting and bidding. If a candidate is available in the organization, who has the necessary skills then he is given the job. The employees might have to go through training only if the management feels like. However if no candidate from within the organization is capable for filling the vacancy only then external recruitment is done47.

4.6 External Recruitment

As said before external recruitment takes place only when no employee within the organization is capable for filling the job. External recruitment also helps the management to select an individual for the job from a much bigger pool of talented candidates. The sources of external recruitment include:

4.6.1 Newspaper advertisements

46 47

Manager, Human Resource Department Manager, Human Resource Department

40

One of the most widely used methods is advertisements in newspapers. The bank advertises the jobs in all the newspapers (The News, Dawn, Jang etc) and the leading business journals. Now for designing attractive advertisements the bank hires the services of advertising agencies47.

4.6.2 Job Fairs

A part from advertising in newspapers the organization also takes part in the job fairs that are conducted by the universities. Askari has been a participant of the job fairs conducted by NIMS. They collect the students resumes and save them in their database and when ever a job is vacant these resumes are considered and the people are contacted for the tests48.

4.6.3 Employee Referrals

Sometimes applicants are often referred by the current employees. However this does not mean that if candidates are referred they would not have to go through the interviews and tests. Even if a candidate is referred, he is given the job only if he has the required skills for the job.

4.6.4 Internet advertising

The company also advertises the jobs that are available on their website www.askaribank.com.pk.

4.6.5 Direct applicants

48

Manager, Human Resource Department

41

Another major source of applicants includes the individuals who make direct application by mailing in resumes or by showing up at the office door. If there are vacant positions in the organization then these candidates are called for interviews and tests. However if no posts are available then the HR department saves the information of these candidates in their database for future reference. Through these mentioned approaches the company successfully attracts an efficient pool of candidates.

4.7 Screening or Short listing of individuals

Once the organization is able to attract considerable amount of candidates, the screening of applicants takes place. The screening of candidates is an integral part at Askari. The purpose of screening is to remove from the recruitment process those applicants who are unqualified for the available job. The screening of candidates is either done by a single manager or a committee consisting of line mangers and in some cases (when availability of time is an issue) personnel specialists are hired depending upon the availability of mangers and time49.

4.8 Selection methods

The selection methods used at Askari bank include the following: Application forms Tests Interviews Medical tests

49

Manager, Human Resource Department

42

3.8.1 Application forms

After initial screening is done the candidates are required to fill out an application form that is provided to them by the HR department. The basic questions asked in the application form refer to the employees age, gender, religion and national origin.

4.8.2 Tests

After the initial screening the employees have to clear a few tests. The employees are tested in four main areas English Economics Mathematics General Knowledge

The organization follows a multiple hurdle approach. This means that the candidate has to achieve a fixed number of score in all the four areas. A score achieved lower than the cutoff score, on one predictor, cannot be compensated by another. If a candidate achieves highest score in mathematics but fail to achieve minimum score in say economics he will not be considered for the job. If the candidates pass the test, only then they would be considered for the interviews. So there is no way that candidates who fail to pass the test will be given the job. Once the results are announced the candidates are short listed for the interview50.

4.8.2a Medical tests

50

Manager, Human Resource Department

43

Apart from testing employees in the four areas of education the company also conducts some medical tests to ensure that candidates that are being considered for the jobs are in good physical condition.

4.9 Interviews

After tests have been conducted then those candidates who perform well on the tests are interviewed. The interview is either conducted by a single manager or by a panel, depending upon the availability of managers. Incase of panel interviews, the people involved in the interview include the manager, the division head of the HR department and the president51. Direct structured interviews are conducted for the selection of employees. The candidate either goes through a single interview or through a series of interview from different people in the organization (depending upon the situation)51. Once the management is over with all the tests and interviews then is the time to make the final decision, which is made by the panel. The candidate who scores well on both the test and the interview and who possess all the skills that are required for the job, that candidate is selected by the department and then he is successfully placed in the job.

51

Manager, Human Resource Depatment

44

4.10 Recruitment and Selection Process at Askari Commercial Bank

Employment planning and forecasting

Recruiting: build a pool of candidates

Applicants complete application forms

Use of selection tools like tests to screen out most applicants

Supervisors and other interviewers final candidates to make final choice

Candidate becomes employee 45

5. Recruitment and Selection Procedures at Standard Chartered Bank

5.1 Brief introduction of the organization
Standard Chartered is the largest International Bank in Pakistan. They are also the oldest foreign bank, with a presence of more than 150 years in this region. Standard Chartered employs more than 600 people and has 30* online branches in Pakistan; 12 in Karachi, 8 in Lahore,3 in Islamabad, 2 in Rawalpindi,1 in Quetta, Peshawar, Sialkot and Faisalabad52. Their success is built on their ability to provide the customers with superior, differentiated financial solutions in the markets we serve. This has propelled them to become market leaders in Pakistan. By continuously assessing customers needs, they have been able to introduce innovative new products and channels52. What sets them apart from their competitors is the premium they place on service excellence. Our rigorous recruitment and training standards ensure that their staff is able to cater to the most complex financial requirements. Central to this service philosophy is the consultative approach they take with each customer. By getting to know them better, they can identify their needs and match them with tailormade product and service solutions52. To put it simply, they are committed to making today's complex financial world easier for their customers.

5.1.1 Consumer Banking

They provide mortgages, credit cards, personal loans, auto loans, deposit accounts, and wealth management products. In order to maximize customer convenience, they offer 24-hour phone banking, e-statements, mobile banking, ATM cards, and debit cards, as well as 30* online, state of the art branches
52

www.standardchartered.com.pk

46

Standard Chartered Bank enjoys a unique position as the oldest and largest international bank in Pakistan, with a presence of more than 150 years52. Their objective is to provide knowledgeable, efficient and reliable financial services. They are committed to offering superior, differentiated financial solutions to help customers manage their money better53.

5.1.2 Commercial banking

Standard Chartered has been in Pakistan since 1863 and is one of the longest operating foreign banks. There are 20 branches that offer full banking services in corporate, institutional and consumer banking and custody services. Adopting a pro-active approach, they are able to offer a flexible and comprehensive range of financial services, in particular transactional banking products. They have also invested in the branches to ensure that the business is supported by high-tech operations using state-of-the-art technology. They have dedicated Customer Service Centers with solution-oriented cash product specialists to provide the customers with cost-effective solutions. Electronic delivery system has been put in place to give the customers maximum control of their transactions53. Standard Chartered fully understands the importance of time, convenience and efficiency to the success of their business. They make easy, the complex financial world and help customers maximize every opportunity53. With over 150 years of experience in trade finance and an extensive international branch network, Standard Chartered is committed to help its customers succeed in every competitive environment. To keep pace with the changing needs, they will constantly review the comprehensive cash, trade and treasury products and services, ensuring that a full range of flexible and innovative services is always available for you wherever you trade54.
53 54

http://www.standardchartered.com/pk/index.html http://www.standardchartered.com/pk/home/aboutus/pli4..html

47

5.1.3Overview of services Standard Chartered Bank is one of the world's leading banks in foreign exchange and money market operations with specialist strengths in exotic currency products. Clients have access to a 24-hour dealing service through 20 dealing rooms in the principal financial centers. The bank has also established a strong reputation for dynamic involvement in new financial products such as options and derivatives and is particularly strong in the emerging market currencies of Asia, Africa and Latin America where it is recognized as being a first choice provider in many markets55. With presence in more than 50 countries and 150 years of experience, the bank has a large local customer base in each of these markets attracting large volume transactions55. They are acknowledged as a leader in a wide range of major currencies and other emerging markets, for both spot and forward rates. In addition, they have also established themselves as a leading provider of a full range of financial risk management products. Customer profile includes private clients, local corporates, multinational companies, global corporates, investment institutions, financial institutions and Central Banks55. 5.1.4 Client Solutions and Risk Management

Protection against adverse market movements - Foreign Exchange: Transaction, translation, economic exposure - Interest Rates: Funding, enhanced deposits - Corporate Finance Acquisitions, disposals, CAPEX, dividends

55

Execution and advice on efficient hedging policy implementation

http://www.standardchartered.com/pk/home/aboutus.html

48

Structured products to match customers's risk appetite and requirements56

5.1.5 Service Provided

Foreign Exchange - Spot and Forward Asset & Liability management - Short Term loans/deposits - Interest rate / Liquidity management

Economic Research & Analysis Customer Risk Management - Non Deliverable Forwards - Interest Rate Derivatives - Interest Rate Swaps - Cross Currency Swaps - Interest Rate Options - Financial Engineering57

Standard Chartered is an international bank, focused on the established and emerging markets of Asia, Africa, the Middle East and Latin America with an extensive global network of more than 570 offices in over 50 countries57. In Pakistan, they are one of the leading banks offering an extensive range of products and services for personal customer, corporate customers and financial institutions. The Corporate Banking Division covers all corporate segments of the local market. In Treasury, Standard Chartered Pakistan has put great emphasis on tailoring and marketing customer focused Treasury related products and services58.
56 57

http://www.standardchartered.com/pk/gmkts/gmkts_main.html http://www.standardchartered.com/pk/gmkts/gmkts_main.html 58 app.com.pk/National.htm

49

Their main objective is to offer outstanding value to their customers by providing a knowledgeable, efficient and reliable service in a personal, helpful and responsive manner.

5.2 Departments
The departments of the Rawalpindi branch are: Customer Services Personal Loan Auto Loans Lockers In this report the focus in on the Auto loans department.

5.3 Auto Loan Financing Department

The auto loans department was established in 1999 in the Rawalpindi Branch. This is the department in which automobiles are leased to their customers. People who cannot give the whole amount at one time to buy a car they can get benefit from this department of the bank. Brand new and even second hand cars are given on lease providing benefits as: Low markup Easy installments More discounts As the only feature of the department is sales it is further categorized in two form, In-house sales and Dealers sales. The in-house sales take place by the banks

50

referred cases or for walk in customers or the telemarketers call out previous bank customers and introduce their product and try to convince them to take the facility. On the other hand the dealer sales are made through authorized dealers. The team managers and BDEs handle such cases. The department includes a staff of more than 30 to 40 members. A governing body governs it, which is responsible for every activity happening within the department59. 5.4 JOB DISTRIBUTION: Different jobs are being rendered in the Auto leasing Department. They differ from the top to the bottom of the hierarchy. The BDE's and Tele marketers bring customers for the department. Specific car dealers are authorized for the bank's department and BDE's job is to go to each and every one and attract customers. Whereas Tele Marketers call all ready existing customers of the bank and convince them to buy their product. The Coordinators and the Team Managers file up and document the cases that are brought in by the BDE's and Telemarketers and mail them to the head office for their approval. They also have direct interaction with the customers and they also deliver the product to them. The Sales Manager checks if there are any discrepancies in the documents made by the Coordinators and the Team Managers before they are sent to Karachi. The discrepancies may be like missing documents, signatures missing or not verified, identity card copy missing etc. What Branch Sales Manager does is to deal with the problems that remain unsolved. He therefore has direct interaction with the Karachi team and asks them whether to accept the case or not. The General Manager Secured Loans
59

Sales Manager, Auto loan Department

51

and the National Sales Manager are in Karachi where the head office of the bank is situated. Every activity is verified and approved by them first then worked upon.

5.5 AUTO LOAN DEPARTMENT STRUCTURE

Figure 2
60

G S

e n e r a l M a n a g e r e c u r e d L o a n s

a t i o n a l S a l e s M a n a g e r

a le s M a n a g e ( Z u lf i q a r A li ) S a l e Is n h e r M o u s e a n a g

e M

a l e r s a n a g

S a e r

l e s

R e g io n a l S a le s M a n a g e r ( S y e d R i z w a n , M a r y a m B o k h a r i ) C ( A m o o r d in a b r e e n t o rT e a m M a n a g e r s A j( a N z a ) v e e d A m ja d , & N o m a n )

B B D E

E s in e v e l o x e c u u

's T e l e e s s M a r k e t e p m e n t t iv e s

r s

5.6 Prerequisites of the Recruitment Process

The recruitment process at Standard Charted Bank begins by first conducting a job analysis. Through job analysis the Hr department determines the duties of the
60

Manager, Auto Sales Department

52

procedure for which the candidate has to be hired, determines the characteristics of the people who should be hired for these posts. The analysis produces information on job requirements, which is then used for developing job descriptions and job specifications. The manager HR department normally aims to collect one or more of the following information via the job analysis 5.6.1 Work activities: The manager collects information on the actual work activities performed. The information is collected regarding the regular work activities performed, the decision making process involved etc61. 5.6.2 Human behaviors: information on human behaviors like sensing, communicating, decision making may also be collected61. 5.6.3 Performance Standards: Information is also collected regarding performance standards by which an employee in the job will be evaluated61. 5.6.4 Human requirements: Finally information is usually compiled regarding human requirements of the job such as job related knowledge and skills, or required personal attributes61 5.7 Job descriptions and Job Specification: After conducting job analysis, the HR department then writes job descriptions. A job description is a written statement of what the job holder actually does, how he or she does it and under what conditions the job is performed. This information is then used by the department to write job specification that lists the knowledge and skills needed to perform the job satisfactorily61. The steps in the recruitment process are described in the diagram below:

61

Manager, Auto Loans Department

53

5.8 Recruitment and Selection process at Standard Chartered Bank

Figure 362

Job Analysis

Job Description and Job specification

Recruitment and Selection Decisions

Performance Appraisal

Job EvaluationWage and salary

decisions

Training requirements

5.9 The Recruitment Process

62

Sales Manager, Auto Loans Department

54

The department to maintain its standard has to recruit the very talented people to work in this field. For this purpose they have both types of recruiting External Internal They dont have a fixed number of job openings, what they believe is that the more people they have the easier it is to render services to their customers.

5.9.1 Internal Recruiting

When there is any vacancy for a job, the head of the department first search for the people within the department who are capable enough for filling that vacancy. This is a source of promotion and transfer of an employee already working in the organization63. What managers do is that they place notices of available jobs at visible areas throughout the organization and candidates are given a specific span of time to respond to the notice. It is also verbally announced that there is a vacancy, so that the employees who have the knowledge, skill and experience for the required post can apply. This process is termed as Job posting63. All the potential candidates apply and submit their rsum and the department manager conduct interviews of the employees. For the purpose of selection the last performance of that employee is viewed and analyzed. It is also taken under consideration that whether the person possesses those skills which are required for that specific job or not. The interviews are structured and are then rated accordingly. Thus the following information is required form the applicant which is also mentioned on the notice64:

63 64

Manager, Auto Loans Department Manager, Auto loans depatment

55

 Personal Rsum Past performance Experience

5.9.2 External Recruiting

External recruiting is attracting people from outside the organization. The department follows different methods to recruit from outside. They attract individuals by giving information about the job openings in64 Newspapers Professional publications Job fairs Write in applicants Internet Contract recruiting

5.9.2a Newspaper Advertisements

Standard Charted advertises in the newspapers when ever a job needs to be filled. When advertising in the news paper the HR department/Auto loan department makes sure that the advertisement reaches the market. The advertisements are therefore placed in all the leading newspapers64.

5.9.2b Professional publications

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A part from advertising in the newspapers, they also advertise the jobs in the professional publications, which include Pakistan Economist Student News

According to the HR manager the main reason for advertising in professional publications is that target groups are likely to be present in large numbers and by publishing in these magazines they believe they can reach their target audience65.

5.9.2c Job Fairs

Job fairs are becoming a common means of entry level recruiting. For the corporate recruiter, they offer an opportunity to reach interviewing terminal velocity--the highest possible number of prospects in the shortest possible amount of time. The bank also recruits fresh graduates by attending job fairs conducted in well-known universities. They believe that it is a very important source of recruitment. (They attended the job fair conducted in NIMS)65

5.9.2d Write in applicants

There are some people who mail their resumes to the bank directly. So whenever the bank is looking for individuals they also contact these people.

5.9.2e Internet Advertising

They also advertise their jobs on the official website
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Manager, Auto Loans Department

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www.satndardcharted.com.pk

5.9.2f Contract recruiting

The department is not yet following any acquisitions and mergers and also no computerized service listing is taking place. At lower levels contract recruiting is also being done. In this method the first 6 months are commission based and if the individual performs according to the standards, in that case contracts are signed66.

5.9.2g Employee referrals

Referred employees are also another source of recruitment. Employee referrals are usually considered when the job needs to be filled immediately. To have a pool of maximum potential candidates every organization tries its best so that ultimately they hire the best one out. This may lead organizations to gain competitive advantage through their skilled and professional employees. For this purpose the auto loans department keeps on providing new opportunities to attract more and more applicants65.

5.10 The Selection and Placement Process

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Sales Manager, Auto loans Department

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The selection process is only based on interviews; no written and medical tests are taken. The HRD head office is in Karachi. However the branch manager makes most of the decisions about the selection of employees67. The department manager conducts the first interview, and if the applicant qualifies only then he is sent to the branch manager for the second interview. The potential applicants as mentioned are interviewed and are scored on the basis of67 Experience Qualification Communication skills.

People who score the highest are selected. They dont require specific data and schedules on the process; their main requirement is the personal rsum. The people selected are also trained according to the job requirements67. For this purpose they also have an orientation and training room. It is a common observation that in the auto loan department referred employees are given more attention then the ones who are recruited and selected through other sources67. The main focus of the department before selecting a person is whether that person fulfills the job demands and the organizational needs or not. For example at the managerial post the job requires a controlling mechanism and ability to handle queries and overcoming discrepancies and also the techniques for measuring the performance of subordinates. In short job analysis is conducted and the type of person needed (on the basis of knowledge, skills, abilities and other characteristics) are placed on certain jobs.

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Coordinator, Auto Loans Department

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Thus they select employees based on knowledge, skills and talent and they are committed to providing equality of opportunity to all employees, regardless of gender, race, nationality, age, disability, ethnic origin, or marital status. They have created global talent management and succession planning processes to help develop high potential employees68. The department does not have any data control process only some information about the applicant is gathered in the form of their rsum and back ground verification from the previous work place or if not then references taken and are noted down68. Further for the selection of the applicant, the applicant has to be physically fit as it is a sales department and employees have to move and outsource their products so disable people are not selected for any type of job. Apart form this no other physical requirement is necessary for the applicant to get selected68.

6. POLICY ANALYSIS OF ASKARI COMMERCIAL BANK

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Coordinator, Auto Loans Department

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6.1 Theory Vs Policies

In the light of all this information that is available, the researcher needs to analyze how similar is Askari Banks recruitment procedure to what is given in the theories. On comparing the information the researcher found a lot of similarities in what is given in the theory about the recruitment processes that organizations follow and the general practice of recruiting and selecting employees at Askari bank. The company makes the pool of candidates available through both the internal and external sources. They post jobs on notice boards incase of internal recruitment, give advertisements in newspapers and journals, attend job fairs conducted in the universities and also advertise on the internet in order to reach the maximum number of potential candidates. The company tests the employees on the basis of their knowledge, skills, personality and communication skills. The company basically follows a multiple hurdles approach, because the employees have to pass the test and have to achieve good marks if they want to be considered for the interview. Their bad performance in test cannot compensate good performance in the interview. In fact if candidates do not perform well in the test they will not be considered for the interview. A part from making a general comparison between the theory and actual practice, the researcher felt the need to interview the employees working in the organization in order to be sure that the actual practice is similar to the documented procedures.

6.2 Interviews from people:

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Respondent 1: The respondent, Ms.Uzma Malik, Manager Lahore Division, did her masters in Economics from Punjab University, Lahore. She is a Gold medalist in Economics. She said that after the results of the examination were declared, she was approached by the organization to work for them. Although she was directly approached by the organization, however she had to go through the formal selection process. She had to go through the test, which she passed, and was also interviewed for the final selection. She said that because she did well on both the interview and the test she was selected. She was then placed in the foreign currency department and worked there for two years. However for the past one year she has been working in the credit division. Respondent 2: The respondent, Mr FArooq, Manager Faisalabad Division did his masters in economics from Quaid-e-Azam University, Islamabad. He saw the advertisement for the manager post in the newspaper and thus submitted his resume. He said that he was then contacted by the bank and was given the date for the test. After a few days of the test, he received a letter from the organization, which mentioned the date of the interview. After the interview he received his letter of his appointment. He has been working for this bank since then.

Respondent 3:

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The respondent, Mr Shahmir Khan, Manager Karachi Division, has been working for the organization for the last five years. He said that he worked in the foreign currency department for nearly four years. However there was a job available in the credit division and he was offered the post and for the last one year he has been working in the credit division. He said that he did not go through any interview and test for it; however he did go through a training program for one month. Respondent 4: The respondent, Mr Aftab, had worked for Habib Bank for 4 years. But for the last 2 years he has been working for this organization. He said that he was offered this job by one of his friend working for this organization. This can be considered as an example of employee referral. He said that although he was referred to this organization by one of the employees, he still had to go through two interviews. The manager of the Human Resource department conducted the first interview, however the panel conducted the second interview. He said that on the day of his second interview he received his appointment letter by the organization. He has been working for this organization/department since then.

6.3 Analysis
After interviewing these people the researcher feels that the organization has a very good method of selecting employees for the job. They test the people on the

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basis of their requirements that they have defined for the various departments. Even if employees refer individuals for job, the individuals have to pass the test and interview for being selected. Like in case of first respondent although the management of the organization directly approached her, she still had to go through the test and the interview. So the researcher found there was no compromise on the procedure. The same was the case with the second candidate when he applied for the job. He had to give the test and go through the interview before his selection by the organization. When we look at the fourth candidate the researcher observed that although he was an experienced candidate but the management at Askari did not give him the job prior to conducting the interview. This was done to ensure that only the right person is selected for the job. One observation that the researcher made was that all the four people that were interviewed, clearly stated that they did not go through any kind of medical examination. However companies policies clearly states that the candidates who are considered for the job should go through certain medical tests. So the researcher found that the organization has written policy regarding testing candidates for health issues however this is not practiced by the organization in reality. After the final selection is made the management decides whether the employee needs to go through training or not. If they feel the need, they train the employee (on the job). So the researcher can safely say that the general practice of recruiting and selecting employees is quite similar to what we have studied. Not only this, the actual procedure followed by the organization for selecting the

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employees is very close to the organizations stated policies. No matter what the circumstances, there is normally no compromise on the policies.

7. POLICY ANALYSIS OF STANDARD CHARTERED BANK

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7.1 Interviews from people

To find out how much similarity is there in the organization policies and the general recruitment practices followed by the organization the researcher conducted some interviews. The analysis of the interviews is given below Respondent 1: The respondent, Ms Shazia Zaidi, holds the position of a telemarketer in the organization. She has been working with the bank for the past two years. She has done her B.Com from Rawalpindi college of Commerce. She said that she submitted her resume with the bank. Then after 3 weeks (approximately) the manager of the Auto loan department contacted her and she was called for an interview. Her first interview was done by the Team Manager, and her second was conducted by the Regional Sales Manager. She said she was informed of her selection over the phone. She has been working at this post since then. Respondent 2: The respondent, Mr Sohail Naeem, is a Business Development Executive (BDE) and a student of Business administration. He is doing his BBA from Allama Iqbal Open University. He is not a permanent employee of the Bank and is working on Commission basis. Before working for the bank he had been working with a leasing company. He said that he had submitted his resume with the Auto loan department. The Sales manager conducted his interview. He said that because of his experience in the

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field he was given the job. He mentioned that he did not go though any second interview. Respondent 3: The responded, Mr Ali, is also a BDE. He has done his B.Com from Punjab College of commerce. He has been working for the organization for the past six months. He said that he has seen the advertisement of the post in the newspaper. He then submitted his resume and was given the interview date. He said that he was interviewed by a panel which included the Dealer sales manager, the team manager and the In house Sales manager. He was given the appointment letter on the same day.

7.2 Analysis

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The theory tells us that recruitment is the process of attempting to attract individuals internally and those in the external labor markets who are capable of and are interested in filling available job vacancies. The recruitment and selection process are linked with each other. Both the processes are divided two sub categories the sources and the system design. The sources as mentioned are the external and internal sources from which an employee is to be selected. The external sources are employee referrals, headhunters outsourcing, internet posting, employment agencies etc while the internal sources include the replacement charts that the organization place so that people in the organization know about the job opening in the organization and potential applicants can apply. Also intranet, rehires and recalls are included in internal sources. In reality the department is practicing both the internal and external sources as the requirements of the job demand innovation and new strategies for providing quality services. In the external sources employee referrals, news paper advertisements, internet advertising, employee referrals and contract recruiting is being practiced. Theoretically under the system design there are further three sub divisions the predictors, the process and the tools. The predictors are according to the content and the criteria that are required for the particular job. The process includes the multiple, compensatory and combined approaches to select a candidate and the tool used is only interviews. From the information collected from the department the researcher analyzed that the system design is not as it should be. There are cases when the person to be selected is predicted on job specific conditions and sometimes on the general terms. The process is also not according to the theoretical terms and conditions. None of the three approaches (multiple, compensatory, combined) are being

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followed. Just the rsum is to be submitted and the person is interviewed twice and thrice for confirmation. As no particular process is practiced the tools are also not specific. No written tests are taken by the organization. According to the recruitment polices tests should be conducted so that the management is sure about the employees skills and his ability so that they could decide how much training should be given to the employees and what level of job complexity the employee could handle. There are no assessment centers where the employees can be involved in role play exercises etc. However the organization has training centers where they train the employees before placing them in the jobs. Interviews are the key tools for the process. There is no specific qualification barrier at the lower level but work skill and good communication ability are two important elements, which are to be present in an applicant and are tested by the expert interviewers in the interview. In books there are ideal situations whereas in actuality this is not the case. As observed that for every step proper documentation is required however this is not the case in Standard Chartered bank's auto loans department. No proper documentation and data control is present for the recruitment and selection process.

8. CONCLUSION
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After going through the literature review, application of the recruitment and selection processes at the two most leading banks of Pakistan i.e Askari Commercial Bank Limited and Standard Chartered Bank, the researcher has come to the conclusion that both the organizations have an effective recruitment and selection process. In the beginning of the research paper the first hypothesis that was formulated was that a well designed recruitment procedure plays an important role in effective Human Resource Management of an organization. The second hypothesis for this research paper was that an effective selection procedure plays an important role in the placement of employees in the organization. At the end of the research paper the researcher is of the view that the paper justifies both these statements. As both the organizations have an extensive recruitment and selection process that not only helps them to hire the best human resource but also helps these banks to stay at the top. Askari commercial bank has an extensive recruitment system, they strictly follow the policies and normally there is no compromise on them. They have a proper selection process; employees are tested on their knowledge and skills and are placed in the jobs accordingly. Standard Chartered, which is an international bank operating in Pakistan, also follows the global practices of recruitment and selection. This can be further justified from the fact that Askari commercial bank has been awarded as the best retail bank for the year 2005 and Standard Chartered is the second best foreign bank in Pakistan. Both these banks consider their Human Resource as an asset of their organizations which helps them to stay at the top and provide the best services to their customers. Therefore the researcher can safely conclude that the organizations which have well designed and effective recruitment and selection procedures recruit the best employees and place them in their jobs according to their skills, knowledge and personality. All this encourages the employees to apply their individual talents in the best possible way that in turn helps the organizations to achieve their objectives.

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9. RECOMMENDATIONS

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9.1 Recommendations for Askari Commercial Bank

Although the company maintains a proper database of employee, but still they should have a detailed database of not only the employees who are working for the organization but also the candidates who apply for jobs for future reference.

New employees are in some respect like the organization raw materials. Therefore they should be processed so that they perform the tasks of their jobs adequately. So whenever new employees are hired the organization should have orientation sessions so that employees are briefed about the organization culture and know about their job responsibilities.

Some employees move jobs in their organizations and so they need further training. So when ever employees are rotated in the organization the HR department should ensure that they are properly trained before they start their job.

College/university recruitment tends to be a yearly process. It has been observed that recruiters lack experience. The organization should thus only send employees who have sufficient experience in the field for

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recruitment purposes so that they select the best employees for the organization

The company mentioned that they advertise the jobs on their website; however they do not do that on regular basis. Therefore they should also use this medium in order to reach to a large market.

A part from testing employees on their knowledge and skills only, the company should also conduct personality and aptitude tests in order to find the best candidate for the position.

When recruiting the employees from internal sources decision should be made on the basis of performance only and not on seniority.

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9.2 Recommendations for Standard Charted bank

After having complete picture of the department the following suggestions are presented for the department. For the purpose of selection the right candidate with the right skills and knowledge required the applicants should be tested through assessment centers. Jobs and tasks may change over time both quantitatively and qualitatively. Therefore their jobs. To be sure that the employees that are selected by the organization would be able to perform their job in the best possible manner the organization should form assessment centers. This is because an assessment center offers a variety of testing techniques designed to allow candidates to demonstrate, under standardized conditions, the skills and abilities that are most essential for success in a given job. This would definitely help the recruiter to make the right decision. Managers involved in selection activities should be fully trained in interviewing/assessing skills. A part from testing individuals on skills and performance it is also necessary to conduct personality tests in order to make sure that employees are placed in their jobs according to their personality in order to obtain a job fit. employees should be updated to maintain adequate performance. Thus people need to be trained so that they perform better in

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 Selection should fairly done not just on general interviews and should be based upon: Skills (skills include job related knowledge, education of employees etc.) Performance: performance of the candidates means how well they have performed in the interview, how confidant they were) Responsibility: the recruiter should try to judge how much responsible the candidate is. The candidate should be reliable, hardworking and responsible if he has to be hired.

Proper records and documents of the employees who are working for the organization and also of people who apply for jobs should be maintained for future consultation.

Tools such as written tests should be included in the system design, as the nature of the all the jobs in the department requires good mathematical skills.

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ANNEXURE

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