Instruction for final exam:

1. All students will bring their own copies of case study during exam.
2. Write your name and registration no. at the top of your copy.
3. No text should be written on your copy except the name and reg. no. If any text found on the
students copy, then paper will be cancelled immediately.

HRM at Affluent Advertising (Pvt.) Ltd

Following case has been extracted from the original case study written by Faiza Muhammad under the supervision of Assistant Professor Farzad
Rafi Khan to serve as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
Names of individuals and locations have been disguised on the request of Affluent Advertising (Pvt.) Ltd to maintain confidentiality .

COMPANY BACKGROUND
Established in 1981, Affluent came into existence as a much needed entity for meeting the growing
demand of the countrys business circle for print and electronic media advertising. In addition, it also
served as an entrepreneurial milestone in the career of Iftikhar Arshad, a renowned journalist of the
country.
Affluent was initially based in Karachi but with the passage of time, offices were opened in Lahore,
Peshawar, Quetta and the capital city of Islamabad. Each of these branches was not only registered
independently but also run autonomously by a different family member. Thus, all financial matters of
each branch were independently handled and individual annual reports were published. Clients were
divided on the basis of location, that is, a company based in Lahore was served by the corresponding
branch, and so forth. If the clients were geographically dispersed, the location of its headquarter
determined the serving branch. The profit generated by each branch belonged to the family member
heading that branch.
Structurally, each branch was designed identically, that is, around functional areas such as client
services, creative and copywriting services, graphic designing and printing, media buying, event
management services, business development, ac-counts and administration (see Exhibit 1). The founding
culture of the organization was rigid and encouraged centralization, efficiency, high productivity and
individual responsibility. All company policies were strictly written in black and white and a manual
containing standard operating procedures was given to each new employee.
Affluent usually hired fresh graduates with 1015 years of education, who willingly offered their
services at much lower wages than the industry norms. These employees learned through trial and error,
and eventually replaced the more experienced lot, thus rendering a high retention rate. Those who did not
show any improvement were tested in other departments and only rarely terminated.
With these design attributes, Affluent enjoyed the fastest growth rate for about a decade. Its clientele
became the second biggest in the industry. It also gained a mono-poly in the government sector, with
names of almost all the ministries on its list of permanent clients (see Exhibit 2). In addition, the low
advertising budgets of most local firms also contributed in enhancing the market share of its modestly
priced services. As a result of Affluents success in Pakistans advertisement industry, as well as the
familial ties of all the branch heads with the founding member, all subsequent branches of the company
inherited the same basic design elements.
In 2000, Iftikhar Arshad transferred the leadership of his personally managed Karachi branch to his
son, Intisar Arshad, who had just completed his postgraduate studies in the West. Intisar had recently
earned his second masters degree in business. The Karachi branch thrived under its new leadership with
revenues reaching their record highest in 2002. Its number of employees almost doubled from 100 to 197
within the span of these two years. Soon after, however, the downfall began and the lowest revenues in
Affluents history were reached within a span of three years. This was largely due to more intense
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competitive pressure from new entrants (that is, international advertising agencies) who were aggressively
expanding their operations in Pakistan by luring talent away from Pakistani advertising agencies with
offers of more rewarding and professional work environments.

AFFLUENT KARACHI: RESPONSES TO ENVIRONMENTAL CONTINGENCIES

To operate more effectively against the new players, Intisar decided to bring about three major changes
within his branch design. First, to effectively cater for market share loss, he established a production
department and held it responsible for audio and video recordings of electronic advertisements. Second,
Intisar set in place a Web designing department to take care of both, demands for Web advertisements and
complete website designing. Together, these changes were to cater to and build on the electronic media
market. Finally, the in-house failure to alleviate turnover and employee satisfaction concerns led Intisar to
hire human resource management professionals along with a Senior Director, Zaheer Ahmad, to head the
Human Resource Management (HRM) department. Zaheer had twelve years of experience in the field,
and was credited for introducing some cutting-edge HR systems in his earlier work experiences.
However, neither he nor his assistant mangers had any prior experience in the advertising industry.

HRM SYSTEM DEVELOPMENT AT AFFLUENT

Immediately after joining Affluent, Zaheer along with his two assistant managers, spent a great amount of
time in studying the prevalent organizational systems and trying to understand the internal causes of
employee dissatisfaction and turnover. Several issues discovered by them are included in the following.

Departmental Intolerance
Affluent Karachi was faced with an implicit tussle and intolerance between three of its principal or line
departments, that is, client services (CS), creative and graphic designing.
Following are some comments by several members of these departments:
The CS people bring incomplete and sometimes misleading information regarding customer demands.
Not surprisingly, then, the advertisement copy that the team prepares tends to come back for revisions
and then the department is blamed for delay in delivery and cost increase.
(Creative Department Head)
We are hardly ever told about the preferred shapes, colors or expected theme of print ads required by
the customers. This is of course the duty of the CS department. But they arent the only culprits. The
creative people also revise their copies twice or thrice. Obviously then our designs need corresponding
changes and new ads require reprinting and re-pasting. But it is not our fault that the costs are rising
up. Why should we then take the blame for somebody else?
(Senior IT Manager, Graphic Design Department)
Customers are never sure initially about what exactly they require. Asking a lot of questions offends
them, sometimes to an extent where they directly tell us that its our job to decide and come up with
appropriate ideas. Another problem is that we arent assigned customers on permanent basis and our
previous knowledge regarding client preferences ends up lost or forgotten.
(Client Services Manager)
On the basis of these interviews, the newly established department forwarded a proposal of structural
change within the organization. According to the proposed structure, each member of the CS, creative and
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graphic designing department was assigned the long-term responsibility of dealing with a particular
client. Thus, within each department there was a member responsible for meeting the requirements of,
say, the Ministry of Health. This structural arrangement implicitly tied members of the three departments
into various teams. Each team was to include two members from the creative department and one from
the other two. Furthermore, one member of the creative department was also going to accompany the CS
executive in the initial stages of the new campaigns.

Absence of Job Descriptions and Training Opportunities

Interviews with several employees throughout the branch exhibited an overall dis-satisfaction with the
absence of job descriptions. According to a junior CS executive:
I hardly know what my job is. When I joined I was given a thick manual of SOPs. It had everything
except my job outline. This void grants managers and executives to use us at their convenience.
Sometimes I have even been asked to pick up lunch from a restaurant.
To overcome this issue, the HR department, under the leadership of Zaheer, set out to prepare specific
job descriptions and thus, eradicate any confusion about what one was required to do. These job
descriptions were designed idiosyncratically for each hierarchical level of each department after
conducting interviews and an organization-wide survey. Multiple people were interviewed for each job
description.
On the basis of these job descriptions, several in-house training sessions were also designed to develop
soft skills, for example, team building, time management, conflict management and resolution and stress
management. Some externally offered courses on core organizational issues such as CS orientation,
effective presentation making and computer programming were also recommended. Each department was
required to attend quarterly arranged in-house sessions. Additionally, members of any one department
were to be selected, according to their turn, for external trainings every month.

Compensation-based Concerns
At Affluent Advertising, salary distribution was generally unpredictably delayed for 1020 days. This was
a major source of dissatisfaction and complaints, especially for those individuals who were low in
hierarchy and whose salary amount did not grant them the leverage to extend expenditure. Particular
concerns for these employees were frequent embarrassments related to the payment of house rent and
childrens school fee, which even made them willing to switch jobs for the same salary level, only if they
could be paid on time.
At the middle level of employee hierarchy, there also existed a dominant feeling of internal and
external compensation inequity. The star performers believed their efforts were not being rewarded and
that they were consistently being paid less than the average performers on account of joining the
organization later than them. When Intisar was approached by Zaheer, in this regard, his response was the
following:
Thats not the real issue. Actually our competitors approach these inexperienced lads and offer jobs at
exactly twice their present salaries. Naturally, they leave. But why should we disappoint our loyal and
committed workers for this lot of uncommitted opportunists? We should not.
To resolve this dilemma, the HR department designed appraisal systems that built on corresponding job
descriptions. These appraisals included a mix of traits, goals and competencies required for each job
cadre. The exact percentage mix varied a little based on the exact nature of job. For example, business
development and media buying departments had a greater percentage allocated to goal achievement than
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the administrative or accounts departments, where a greater percentage was allocated to competencies.
The average percentage allocated to each section was 15 per cent for traits, 35 per cent for goals and 50
per cent for competencies.
Appraisals were to be held on a quarterly basis by the department heads, after which employees were
sent a copy of their evaluations. This was followed by self-evaluations and counter arguments. Finally,
each employee was to meet with the department head, in person, and have a personalized discussion
regarding performance gaps and improvements. Goals for the next quarter were also mutually decided
during this meeting. The appraisals for the top management team and department heads were to be carried
out by Intisar, while HR managers also collected informal or anonymous feedback through their
respective subordinates.
On the basis of individual rankings, a merit-based bonus plan was designed, which was to replace the
existing annual increment system. According to the plan, those reaching a mark of excellence, in the
quarterly appraisal, were to be eligible for a bonus amount equal to 80 per cent of their monthly salaries.
The amount for those making it to good and above average categories of performance was 50 per cent
and 25 per cent of monthly salaries, respectively.
Finally, in light of the newly carved job descriptions and compensation plan, a credential-based
rigorous selection criterion was also devised to replace the earlier patronage-based selection and informal
recruitment through internal sources. The candidates were first interviewed on telephone to check
presence of mind and sharpness. This was a sort of quick elimination round. Those who passed were
called for a written test in which they were given short cases based on an advertising agency. Here, the
candidates were to narrate what they would do if they were in the shoes of the case character. Towards the
end of the test, candidates for the core departments were also asked to design a campaign comprising a
logo, slogan and radio or print advertisements for given client requirements. Those who passed the test
were asked to prepare a 10-minute presentation, within 24 hours, on the campaign they had designed. The
selected candidates were finally called in to discuss their salary package and how they could earn above
industry standards on the basis of their performance.
After finalizing these structural changes, a report was sent to the CEO for approval. It took the HR
department about ten months to prepare the first draft of the proposed report.

GRIEVANCE-VOICING MECHANISM
A lack of grievance mechanism was a largely held gripe in Affluent. Employees expressed a need to voice
their opinions anonymously. When asked for the reason behind this anonymous grievance registration, a
female graphic designer replied:
Several of my colleagues made the mistake of publically raising their concerns, in the past. They were
all terminated within a span of two months on trivial grounds; one simply because she was often seen
with a male colleague at the lunch table. The guy is still here because he hadnt voiced any public
grievance.
To overcome this issue, the HR department arranged several complaint boxes. One was hung in the
lunch room and others at the entrance of each floor.

Alteration in Administrative Policies

The newly established HR department extended its list of policy recommendations to include policy
statements for frequent absenteeism and leave, late arrival, deliberate prolonging of clients visiting time,
demand of unreasonably high fuel charges for client visits, unacceptably high mobile usage in the name
of CS, recurrent loan applications, etc. These policy statements are illustrated in Exhibit 3.
The suggested leave, absenteeism and late arrival policy did not accommodate any absences without
salary deduction. However, it did allow two paid leaves, at maximum, per month. The leave application
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earned consideration only if it was submitted twenty-four hours in advance. All unavailed leaves could be
encashed at the end of the year. Finally, any late arrival after 9:15 a.m. was counted as absenteeism.
According to the transport and fuel policy, CS executives were allocated a weekly fuel expenditure of
Rs 700. This was regardless of the number of visits made to different clients or the nature of relationships
shared with them. The executives were to maintain a record and minutes of their client visits and justify
the time expended if so desired by the administrative department.
Akin to the transportation disbursements, a fixed chargeable amount of Rs 500 per month was
authorized for the CS executives on account of mobile usage. For employees of all other departments, the
figure was reduced to Rs 200. Any bill amount exceeding this limit was deductible from the salary of the
concerned employee.
Further, a loan policy was introduced which prohibited any loan grant above 200 per cent of the salary
amount. The loan had to be returned, through salary deductions, within a maximum period of 46 months.
Lastly, a second loan could not be applied for before the previous one was cleared.
In addition to the above mentioned recommendations, HR department also drafted a policy statement
for overtime, which recommended monthly payments for all hours spent on the job after 6:00 p.m., if
approved by the employees department head. Finally, a printing policy was also forwarded that restricted
the printing facility to the graphic design, creative, HR and accounts departments only. While the latter
two were granted unlimited access, the creative copywriters were allowed only four text pages of black
and white prints per copy. Similarly, the graphic designers had to suffice with two black and white image
printouts during intermediary stages of advertisement development. A third one was tolerable, but worth
high discouragement from supervisors. Color printouts were allowed for final versions of print
advertisements only.

RESPONSE TO HR DEPARTMENTS INITIATIVES

Chief Executives Response
Intisar asked each department head to ensure a common job description for all hierarchical levels of a
given department. Additionally, he also recommended a uniform appraisal form for the entire organization
(see Exhibit 4). This form was to be filled by the assistant HR managers, instead of the department heads .
The employees were to be kept in the dark about their evaluations. Only the bonuses and promotions,
distributed by Intisar, were to be announced, if any. A lunch or tea ceremony of two hours and thirty
minutes was to be arranged for this purpose, by the administrative department, in a specially booked
banquet hall of good reputation. When such arrangements were not possible, catering services could be
employed in the executive meeting hall. In either case, choice of hotel or caterers was subject to voting
between the options presented by the administrative department. Attendance was a must for all whitecollar employees, though exceptions could be granted to the top management team. Blue-collar
employees were excluded from the event.
The selection mechanism was also altered. At the present time, most of the new-comers came through
acquaintance with Intisars family. They were neither interviewed nor tested, rather called only for a
meeting with the HR managers. This meeting was more often ceremonial, in which their salary was
decided and introduction to their department head made. Further, the recommendation for external
training sessions was rejected, on account of lack of budget. In-house training was approved, which the
HR managers were to design without any raise in base salary or bonus earning. Finally, it was left to the
department heads to shape the on-the-job training track of their employees, observe their progress and
assign clients and goals accordingly.
In terms of the administrative policies, the overtime recommendation was overruled straight away,
while the transportation, printout, leave, absenteeism and late arrival policies were assumed without any
delay. The loan policy was accepted but with an added condition of signing a legal document before
approval of the loan, stating the date of return (see Exhibit 5). The mobile usage policy was altered from
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monetary to free-minute allocation (see Exhibit 6). These newly decided policies were communicated to
the administrative department for implementation.
Intisar and his top management team, that is, the department heads (other than the HR director), also
kept the leverage to terminate any of the employees at any time. The decision, however, was to be
communicated by the HR managers, who had to frame it in the previous performance appraisal held by
them. Often the HR managers were also directed to ask the employee to submit his resignation rather than
directly terminating him. The remaining dues of the leaving employees were not immediately cleared and
a couple of months could pass before final clearance from Affluent. This ensured that they could not blow
whistles or exhibit explicit resistance against the decision.
Lastly, Intisar announced several one-day outdoor trips and dinner ceremonies such as Iftar, Eid
Millan, etc., to control employee turnover and dissatisfaction.
Exhibit 1
Original Structural Configuration at Affluent Advertising (Pvt.) Ltd

Source: Company documents.

Exhibit 2
List of Major Clients of Affluent Advertising (Pvt.) Ltd

Pakistan Tourism Development

Corporation

National Database and Registration

Authority (NADRA)

Malir Development Authority

Ministry of Information & Media

Development

Central Board of Revenue

National Highway Authority

Lahore Development Authority
Central Directorate of National Saving
University of Punjab
Capital Development Authority
Board of Investment
Eden Developers

Pakistan Post Office (Airex, UMS, LPS,

Datapost and Other Services)
National Highways and Motorway Police
Ministry of Health
Askari Leasing
Bahria Town
National Reconstruction Bureau
Gwadar Golden Palms
Pakistan Ordinance Factories

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Haleeb Ltd
D.G. Cement

Election Commission of Pakistan

Pakistan Telecommunication Company
Limited

Comsats Institute of Information

Technology (CIIT)
Securities and Exchange Commission of
Pakistan (SECP)
The Bank of Punjab
Oil and Gas Development Company
Limited (OGDCL)

First Women Bank Ltd

Pakistan State Oil (PSO)

Shezan International Ltd

Mecca Cola Beverages Pvt. Ltd

State Life Insurance

Export Promotion Bureau

Zarai Taraqiati Bank (ZTB) Ltd
Muslim Commercial Bank (MCB) Ltd

National Engineering Services Pakistan

(Pvt.) Limited (NESPAK)
Privatization Commission
Pakistan International Airlines (PIA)
Water and Power Development Authority
(WAPDA)

Source: Company documents.

Exhibit 3
Suggested Policy Statement for Loan Grant, Absenteeism and Mobile Usage
To: Chief Executive Officer
Subject: Suggested New Loan Policy
Dear Mr Intisar,
Based on our earlier exchange of ideas, I hereby propose that the following conditions be included in the new loan policy being
introduced at Affluent:
The loan amount requested must be in accordance to the salary structure of the employee and recoverable within 6
months, through deduction from salaries.
No loan amount greater than the sum of two months salary will be approved.
The employees have to present documented evidences of the genuineness of their request. A second loan cannot be
applied for if any previous loan is unsettled.
No more than two loans can be applied for, per year.
The loan amount does NOT ensure job security. If an employee resigns/quits or gets terminated after taking a loan, the
remaining sum will have to be returned within a period of one month, failing which he will be subjugated to legal action.
In addition, our department also suggests the following stances to appropriately manage the soaring rate of absenteeism and leave
at Affluent:
No absenteeism should be allowed without salary deduction.
A 45-minute delay, beyond official arrival time of 8:30 a.m. should be counted as an absenteeism deserving
of salary deduction.
No more than two leaves should be granted, per employee, per month.
Any unavailed leave should be compensated monetarily equal to one days salary, at years end. The leave application
must be submitted 24 hrs beforehand, for being eligible of grant.
Finally, it is also suggested that a fixed sum of money be allotted to individuals, on account of mobile usage based on
departmental needs. Thus, a sum of Rs 500 seems sufficient for the CS department, while Rs 200 should suffice for members of
all other departments.
Zaheer Ahmad, Director HRM

Page - 7

Source: Company documents.

Page - 8

Exhibit 4
Individual Evaluation Form
Part A: Personality Traits (15%)
Instructions
Please use the below mentioned rating scale to evaluate the individuals behavioral traits. All traits are from organizational
perspective, especially trustworthiness.
Rating Scale
0
1
2
3
4

Poor
Bare minimum level
Above average
Good
Excellent

Performance Competencies
1. Professional Integrity and Honesty
2. Commitment and Loyalty
3. Resourceful/Helpful/Cooperative
4. Charisma/Personal Aura/Source of
Inspiration and Motivation
5. Neatness/Hygiene/Workplace Condition

Weightage (W %)
2
5
3
3

Rating (R)

Net Result (W% R)

Part B: Goal Attainment Evaluation Form (35%)

Instructions
Rate the evaluatees performance based on the actual achievement of goals assigned. Multiply this rating with the weightage
and calculate the weighted score for each goal.
Rating Scale
0
1
2
3
4

Key Goals
Increase revenue from existing
customers
Decrease cost of service
Number of visits to clients

Poor
Bare minimum level
Above average
Good
Excellent

Weightage %

Target

Actual
Achievement

Rating

Weighted
Rating

Applicable for CSD

15
5
5
(Exhibit 4 continued)

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(Exhibit 4 continued)
Key Goals
Recovery targets for accounts
receivable

Weightage %
10

Target

Actual
Achievement

Rating

Weighted
Rating

Applicable for Creative

Increase revenue from existing
customers
Decrease cost of service
Numbers of ads approved

15
5
10
Applicable for Media

Decrease cost of service

Number of jobs handled
Credit period from creditors
Decrease cost of service
Time taken to generate reports
Time taken to update records for
accuracy

20
10
5
Applicable for Admin & Finance
15
10
10

Part C: Performance Behaviors (50%)

Performance Competencies
1- Communication and Presentation Skills
Oral and written comprehension
Language structuring and vocabulary
Convincing power to sell an idea
through articulate, sell and defend concepts
You Attitude
Adapting presentation style according to
requirements
Level of being respectful/considerate/
mannerly/enduring
Restrains emotional impulses
Responds calmly
Listening actively and responding sensibly
Effective use of empathy
Effectively planning, prioritizing and
sequencing events to meet deadlines

Weightage (W%)

Rating

Net Results (W%*R)

15%

(Exhibit 4 continued)

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(Exhibit 4 continued)
Performance Competencies

Weightage (W%)

Rating

Net Results (W%*R)

2- Relationship Building and Networking

Client insight and intuition; the ability to
intuit/anticipate the clients needs, read
between the lines and design/create value
added solutions and relationships
Research-based knowledge of own and client
business
Clearly narrating requirements to (internal/
external) individuals
Keeping status checks and maintaining
coordination till projects assigned are
completed
3- Personal and Corporate Effectiveness
Professional confidence
Result orientation
Commitment to learning
Organizational awareness
Knowledge of skills relevant to job
Active participation in brainstorming sessions
4- Punctuality/Observance of Work Hours

15%

10%

10%
Total Rating Points (b) = ________

Overall Rating
099
Below Average

100199
Above Average

200299
Good

300399
Excellent

Remarks
____________________________________________________________________________________________
____________________________________________________________________________________________
____________________________________________________________________________________________
____________________________________________________________________________________________
____________________________________________________________________________________________
_________________________________________________________
Signature HR Manager: _________

Signature Supervisor: _________

Source: Company documents.

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Exhibit 5
New Loan Policy
To: All Organizational Members
From: Chief Executive Officer
Subject: New Loan Policy
Dear all!
This is to inform you that a new loan policy has been devised by The Company and states as under:
The loan amount requested must be in accordance to the salary structure of the employee and recoverable within 6 months
through deduction from salaries.
No loan amount greater than the sum of two months salary will be approved.
The employees have to present documented evidences of the genuineness of their request. The employees must sign
a contract stating the promised period of return.
A second loan cannot be applied for if any previous loan is unsettled. No more than two
loans can be applied for, per year.
The loan amount does NOT ensure job security.
If an employee resigns/quits or gets terminated after taking a loan, the remaining sum will have to be returned within a
period of one month, failing which he will be subjugated to legal action.
Source: Company documents.
Exhibit 6
New Mobile Usage Policy
To: All Organizational Members
From: Chief Executive Officer
Subject: Revised mobile usage policy
Dear all!
This is to inform you that company has restructured the cell-phone packages and allowed and assigned certain free minutes to
each organizational member, according to their anticipated mobile usage. According to the new policy:
1.

The company will only pay for the line rent and tax charges for each employees mobile usage cost.

2.

Within the free minutes allocated to each employee, he/she will NOT be charged additionally and NO deductions will be
made from salaries.
If an employee exceeds his/her mobile usage limit, s(he) will be responsible for the payment of additional charges, failing
to do so will result in disciplinary action.

3.

PS: Mr Shabbir of Accounts Department has a list of free minutes allocated to members of different departments.
Source: Company documents.

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