Implementation of Broad Banding at HBL

S

H

R

D

Being

Being

Prese

nted By:

Prese

nted By:

Adnan ur Rehman 082103Adnan ur Rehman 082103

Muhammad Ali 0921117 | Rajesh Kumar 1021132Muhammad Ali 0921117 | Rajesh Kumar 1021132

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

BROAD BANDING AT HABIB BANK LIMITED

With banking sector reforms 1997, a large number of employees were retrenched under Golden handshake Scheme, as a consequence a ‘skill gap’ was created in the bank.

In order to fill this ‘skill gap’ and due to ban on hiring in permanent cadre executives from international banks were inducted on three years contract at HBL to steer the process of transformation.

A visible disparity in salary packages emerged due to the market-based compensation of new hiring as against HBL’s conventional pay levels.

The persisting anomaly in compensation caused great de-motivation in HBL regular employees.

Conversely due to the three years tenure, the contract employees also lacked a long-term commitment to the Bank

BACKGROUND

123456789

10111213141516171819202122232425262728293031323334353637

BROAD BANDING AT HABIB BANK LIMITED

With the passage of time the contractual employees increased in number.

The animosity and feeling of disgust amongst regular and contractual employees increased and the permanent employees blamed management of injustice and favoritism due to salary differentiation.

The regular promotions from officer into executive cadre after every 3 to 4 years also was making the organization ‘top heavy’. The rankers were more general bankers with little specialized knowledge and were not equipped with modern day banking concepts.

The management wanted a more flatter organization and wanted a more diligent linkage between job responsibility and compensation.

BACKGROUND

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

BROAD BANDING AT HABIB BANK LIMITED

Conflicting institutional priorities

Institutional challenges

Cultural challenges

Management challenges

Major financial sector threat

BACKGROUND

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

S.No Statement Satisfaction Level

1 Discrimination in the workplace 2.35

2 Clear job descriptions 2.48

3 Support for performance of job 2.48

4 Recognize for good work 2.48

5 Environment that fosters Trust 2.5

6Training and Development

Programs2.55

7 Physical working conditions 2.55

8 HR Group efforts 2.6

9 Work environment 2.61

10 My workload is manageable 2.64

Regular v/s Contract Employees

EMPLOYEE CLIMATE SURVEY 2007 KEY ISSUES

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

Town Hall HR Issues

Employee De-motivationEmployee De-motivation

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

EMPLOYEMENT TYPES

GRADES / LEVELS Regular Contract Total

Senior Executive Vice President 0 11 11

Executive Vice President 17 29 46

Senior Vice President 78 45 123

Vice President 232 63 295

Assistant Vice President 746 61 807

TOTAL 1,073 209 1,282

Regular Vs Contractual Executives

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

Figures in Million – Annualized Median

Current Grades

CashBenefit

Petrol CarBen.

Driver Guar.Bonus

Medical Reimb.

End of Service

Total Comp.

SEVP (C)

EVP (C) 3.73 0.32 0.48 0.07 0 0.41 0.35 5.36

EVP (R) 1.50 0.32 0.89 0.07 0.12 0.04 0.09 3.03

SVP (C) 2.22 0.19 0.41 0.06 0 0.24 0.20 3.32

SVP (R) 1.13 0.19 0.41 0 0.09 0.03 0.07 1.92

VP (C) 1.37 0.15 0.28 0 0 0.15 0.13 2.08

VP (R) 0.85 0.15 0.08 0 0.07 0.02 0.07 1.24

AVP (C) 0.89 0.12 0.07 0 0 0.10 0.08 1.26

AVP (R) 0.63 0.12 0.07 0 0.05 0.02 0.04 0.93

*Loan benefit and club membership is not covered

Calculation of Total Guaranteed Pay (Executives)

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

Current Regular/Contractual Ratio

98%

2%

Regular

Contract

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

ANALYSIS & KEY FINDINGS

The two-tier compensation issue is mostly a perception issue

The data indicates that:

There are only 209 employees on contractual package which is just 16% of the executive cadre

The gap to catch up with contractual package varies from 43% to 26% which is not as wide as general perception

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

IDENTIFIED REMEDY:

Introduce a One-Tier Compensation for the entire Bank by converting all contractual employees on regular payroll

Introduce salary bands at each level to factor the salary variance

Revise salary ranges to broader scale linking pay with competencies/performance aligning pay with market

Alignment of benefits on a consistent basis

Faster adjustments in case of critical resources

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

IMPLEMENTATION OF BROAD BANDING

PROPOSING ONE TIER

COMPENSATION STRUCTURE

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

TOTAL PAY CONCEPT

Overall Equal

Benefit

Elimination of the concept of

Two Tier

Communicating it to the employees

Defining Salary

Structure / Levels

Benefit Monetization

Emphasis on Variable

Pay

STEPS TOWARDS IMPLEMENTATION

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

BROAD BANDING AT HABIB BANK LIMITED

NEW TITLES UNDER

BROAD BANDING…………

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

BROAD BANDING AT HABIB BANK LIMITED

Melding of job clusters or tiers of positions into relatively wide bands of pay ranges for the express purpose of gaining flexibility in managing career growth and administering base pay. (O’Niel, 1993)

Broad banding involves the collapsing of several salary grades into a few broad "bands" with significantly larger pay ranges (Milkovich & Newman, 2002).

“Pay tends to be market driven in broad-banded pay systems with more emphasis upon internal equity in traditional pay systems” (Gilbert Fd Abosch, 1996)

WHAT IS ‘BROAD

BANDING???’

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

BROAD BANDING AT HABIB BANK LIMITED

Internal alignment between regular and contractual employees

A flatter structure will:Enhance cross-mobility in careerReduce levels of administrationImprove decision making and quicker response timeFacilitate attraction and retention of quality resources

Improved Efficiency Simpler salary administration process Faster grade placement decisions

WHY‘BROAD

BANDING’ ?

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

BROAD BANDING AT HABIB BANK LIMITED

Reducing job levels from 9 to 7 by merging grades

Employees will be assigned to one of the bands according toTheir salary/level – short termJob evaluation – mid to long termThe gap in similar level jobs will be adjusted in phasesIndividuals will move horizontally and vertically based on job enrichment

Pay bands will support pay for performance and flexible hiring

Salary adjustments at the time of annual increase / renewal of contract

Rationalized titles structure

KEY FEATURESOF

‘BROAD BANDING’

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

Level Alignment/New Titles (Executives)

President / CEO

SEVP

EVP

SVP

VP

AVP

SVP

VP

VP

Group Executive

AVP

General Manager

Deputy General Manager

Senior Manager

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

Level Alignment/New Titles (Officers)

OG-I

OG-II

OG-III

CO/JO

OG-II

OG-IIIOG-III

CO/JO

Manager

Assistant Manager

Officer

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

Population Distribution (Executives)

HBL Broadband Pay System

Pay Band 1 Pay Band 2

Current GradeRecommended

Grades1A 1B 2A 2B

SEVP (C) Group Executive 15*

EVP (C)General Manager

11 15 0 0

EVP (R) 16 0 0 0

SVP (C)

Deputy General Manager

0 0 45 0

SVP (R) 0 0 78 0

VP (C) 33 30 0 0

VP (R) 230 2 0 0

AVP (C)Senior Manager

4 57 0 0

AVP (R) 449 297 0 0

Grand Total 1,282

*including 4 EVPs working as group heads

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

Population Distribution (Officers)

HBL Broadband Pay System

Pay Band 1 Pay Band 2

Current GradeRecommende

d Grades1A 1B 2A 2B

Officer Grade I Manager 1905 52 0 0

Officer Grade IIAssistant Manager

0 0 2726 0

Officer Grade III 3728 159 0 0

CO/JO Officers 200 58 0 0

Grand Total 8,828

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

BROAD BANDING AT HABIB BANK LIMITED

MOVING TO ONE SYSTEM

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

Towards One System

OneEmployment

System

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

ONE BANK | ONE TEAM | TEAM HBL

IMPLEMENTATION STRATEGY

Communication/town hall meetingsFive back to back sessions covering over 2,000 employees

Senior management at Head Quarter Karachi Islamabad Lahore Multan

Highly interactive communication sessions at all locations

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

HBL Organization Restructuring

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

Broad Banding

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

28

Key Features

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

Implementation Challenges Anticipated

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

Analysis of Driving & Restraining Forces:

Urgent Job

Evaluation

CommunicateAnd

Education

CommunicateAnd

Education

ImplementNew

Policy

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

THE FINAL WORD:

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

The communication strategy was cleverly planned out to exclude the negative implications of the strategy. Majority of the officers and executives failed to understand that the career ladder has been made long.

Employee’s concern regarding their placement in the appropriate band based on proper job evaluation is still due which may deteriorate the effects of the entire ‘Broad banding’ implementation initiative.

123456789

10111213141516171819202122232425262728293031323334353637

SHRD

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

(Anthony J.D’ Angelo)

123456789

10111213141516171819202122232425262728293031323334353637

Any Questions?