COMPENSATION MANAGEMENT

Report
HBL

SYED ALI RIZWAN (04151713014)

GHULAM ABBAS (04151713043)
HYDER ALI (04151713008)

INTRODUCTION TO HBL

Habib Bank Limited commonly referred to as "HBL" and head-quartered in Habib Bank Plaza, Karachi,
Pakistan, is the largest bank in Pakistan. The bank has a network of 1425 branches in Pakistan and 55
branches worldwide. It has a domestic market share of Over 40%. It continues to dominate the
commercial banking sector with a major market Share in inward foreign remittances (55%) and loans to
small industries, traders and Farmers. Overseas, it has operations in the following countries:
Afghanistan, Australia, Bahrain, Bangladesh, Belgium, Canada, China, France, Hong Kong, Iran, Kenya,
Lebanon, Maldives, Nepal, Netherlands, Nigeria, Oman, Singapore, Sri Lanka, Turkey, UAE, UK & USA.

Company Description:
HBL is a Banking Company, which is engaged in Commercial & Retail Banking and Related services
domestically and overseas.

HUMAN RESOURCE MANAGEMENT DEPARTMENT OF HBL

HUMAN RESOURCE MANAGEMENT STRUCTURE:

The HRM department plays an important role in value of any company. HBL has very Active and one of
the best HR department in Pakistan as well as worldwide. The structure is as the President is assisted by
ten Senior Executive Vice-Presidents and a staff of 29 Executive Vice Presidents, 154 Senior Vice
Presidents, 420 Vice Presidents, 831 Assistant Vice Presidents, 2350 officers Grade-I, 4108 officers
Grade-II, 3364 officers Grade-III and 10658 Clerical/Non- Clerical employees.
HR FUNCTIONS:

HR manual contains five functions:

1. Selecting and Recruiting
2. Training and Development
3. Performance Appraisal
4. Compensation
5. Employee relation

1.SELECTING AND RECRUITING:

The recruitment and selection process starts with employment planning. This process of deciding what
positions the firm will have to fill, and how to fill them. Personnel or employment planning embraces all
future positions, from maintenance clerk to CEO.

2.TRAINING AND DEVELOPMENT:

Training is the process of teaching new employees the basic skills they need to perform their jobs and
development is result of that training.

3.PERFORMANCE MANAGEMENT AND APPRAISAL:

Evaluating an employee’s current and past performance relative to its performance standards is called
performance appraisal. A process that consolidates goal settings, performance appraisal, and
development into a single common system to ensure that employee’s performance is according to
company’s aims is called performance management.

4.COMPENSATION:

Compensation refers to both intrinsic and extrinsic rewards employees receive for performing their jobs.
Compensation is a tool used by management for a variety of purposes to further the existence of the
company. Compensation may be adjusted according the business needs, goals, and available resources.

5. Employee relation:

Employee Relations involves the body of work concerned with maintaining employer employee
relationships that contribute to satisfactory productivity, motivation, and morale. Essentially, Employee
Relations is concerned with preventing and resolving problems involving individuals who arise out of or
affect work situations.

COMPENSATION SYSTEM OF HABIB BANK LIMITED

HBL`s focus on attracting, developing and retaining their employees by offering market competitive
compensation system. HBL has well established and one of best compensation system in Pakistan.
BASES FOR PAY:

Different companies use different bases for pay like some use seniority pay and some merit pay. HBL
follows Merit pay plans that are based on performance evaluation of employees. In addition to that,
incentive plans are also offered on the bases of behavioral encouragement plans and along with that
person focused pay is also considered. The objective of person focused pay is to compensate employees
for their knowledge, skills and competencies require for particular job.

Merit pay plan:

Merit pay plans can be defined as pay increases based on performances. HBL prefer merit pay to
motivate future performance because they give merit pay for excellent efforts or results. HBL`s gives
merit pay with addition to fixed salary to its employees. Companies uses different performance
appraisal methods like trait characteristic, behavioral, goal oriented etc to check performance of
employees for merit pay.in same manner HBL also do performance appraisal of its employees. At HBL
behavioral system for performance appraisal is used. Behavioral system rate employees on the extent to
which they display successful job performance behaviors. But, these performance appraisal system may
vary as per position but for majority of position/posts HBL uses behavioral system for performance
appraisal. HBL uses number of deposit for appraisal of employees; greater the number of deposit higher
the rewards. Sometimes, number of deposits are set to be achieved by employee and if any employee
exceed set target then he/she is rewarded more than those who have not exceeded the given target.
Performance appraisal at HBL at the end of year in December by supervisor of given position/post.
Supervisor are given performance appraisal form and they have to fill for each employee working under
them.

Incentive Pay Plans:

Incentive or variable pay is defined as compensation other than base wages or salaries, which fluctuates
according to employees` attainment of some standard, such as a preestablished formula, individual or
group goals, or company earnings. Incentive pay are one time payment for attaining some standards.
Incentive pay plans are divided into three categories,
1. Individual incentive,
2. Group incentive,
3. Company wide incentive.

HBL also gives incentive on individual basis and these individual incentive are based on behavioral
encouragement plans under behavioral encouragement plans employees receive payment for specific
behavioral accomplishments like good attendance etc. At HBL group incentive are also given. And these
group incentives are given on team base like if any team completes a project of HBL then all members of
groups will be given financial reward for completing project successfully.

Person-focused Pay Plans:

Person focused pay plans generally reward employees for acquiring job related competencies,
knowledge or skills rather than for demonstrating successful job performance. With addition to merit
and incentive pay HBL also use person focused pay plans for rewarding its employees. HBL specially use
person focused pay to keep their employees up to date with new software relating to banking sector or
acquiring new knowledge/degrees like HBL rewards employees for doing MBA/ACCA etc. HBL mainly
gives person focused pay on educational basis like doing MBA etc. HBL uses person-focused pay because
it thinks that through person-focused pay plans everyone will start working and try to learn new skills
that will help HBL to achieve its long-term goal.

Employee Benefits

There are three types of employee benefits and these are:

1. Discretionary benefits,
2. Employer-sponsored retirement plans and health insurance programs,
3. Legally required benefits.

Discretionary employee benefits are also called voluntary benefits. The goals which employers hope to
achieve when offering discretionary benefits are: protection, paid time off and services to enhance work
and life experiences. Protection program are like income protection program, health protection
program, retirement programs etc. Paid time off is compensating employees when they are not
performing their primary work duties like holidays, vacations, sick leaves, sabbatical leaves etc. Services
are like employee assistance programs, family assistance programs, transportation services,
outplacement assistance etc.

Discretionary benefits which HBL is offering to their employees are protection program and paid time off
services. In protection program they give their employees health and safety insurance and in paid time
off they offer sabbatical programs like they give them opportunity that in evening time you can join any
institute for further education. And the services which HBL bank is offering to their employees are
employee assistance and family assistance services.

HBL bank believes that providing benefits along with pay to employees give them motivation to work
more for organization and if employees are motivated then they can perform more work which
ultimately are beneficial for whole thy organization and also benefits make them more committed to
their work because they are getting what they are deserving.

The retirement benefits which HBL is providing to their employees are provident and gratuity funds.
Provident fund is an investment fund contributed by employers and employees and then a lump sum is
provided to each employee on the time of retirement. Gratuity fund is part of salary that is received by
an employee from his/her employer in gratitude for the services offered by the employee in the
company. HBL pays retirement benefit in the form of lump sum payment (50% of employer contribution
and 50% of employee contribution) at the time of retirement. After that they don’t give them any
monthly payment as pension or in the form of annuity. Up to 2005 whole the banking sector was
providing pension fund but after 2005 no any bank is providing pension fund to their employees that’s
why HBL is also not providing.

HBL is providing life and health insurance coverage to its all employees even if they work for one day
and next day he is dead then he is covered under life and health insurance. If any employee in HBL had
borrowed loan I case of death of employee whole loan is covered and also bank will give 7.5lacs to
his/her family. Group insurance plan is also workable in HBL bank. The retirement options which HBL
bank give to their employees depends on market, first they do market survey then accordingly they give
to their employees.

JOB ADVERTISEMENTS

According to our group research, the most advertised job title provided by HBL is cash officer and the
second most advertised job is branch manager job. The advertised job titles are as follows:

Cash officer job:

The required skills for this job are cash handling, communication and hardworking. The education
requirement is graduation or masters. City: Peshawar and Islamabad

Branch Manager:

Management skills and experience required. Masters degree required. City: Islamabad

Marketing Officer:

Marketing skills. City: Multan

Customer Services Officer:

Communication skill, languages and graduation required.

City: Karachi

Head Audit:

Auditing knowledge and skill.

City: karachi

CONCLUSION
The Compensation system of HBL values the performance of employees most. It has a direct relationship
with employee motivation and performance. It includes extrinsic as well intrinsic compensation factors
for employees. Extrinsic benefit plans play an important role in developing positive perception of an
employee towards its organization and towards its work. Instruments of intrinsic factors have a
profound impact upon an employee’s loyalty and commitment. In addition to that it is helpful in
employee retention as well as in reducing organization’s turn over. Intrinsic factors play the role of
motivators for the employees and associate them with their job and organization. They feel important
and consider their performance as organization performance and image of organization as their own
image.