The Compensation System

in the Banking Sector of

Pakistan: A Comprehensive
Overview
1. Introduction

This presentation will provide a

comprehensive overview of the
general compensation system
implemented within the banking
sector of Pakistan. It will detail the
various key components of the
compensation system, including
salary structure and compensation
de nition.
2. Background
Pakistan's banking sector is
complex and consists of a
wide range of businesses.
Generally, banks in the
country are largely
government owned and
have provided important
nancial services to the
public for decades. It is
important to understand
the background of the
banking sector in order to
better understand the
compensation system.
 3. The current
compensation system
in Pakistan

The current banking sector in Pakistan

comes with its own unique compensation
systems. Di erent banks provide
di erent levels of incentives and bene ts
to their employees, depending upon the
size, complexity and range of their
services. Understanding this system and
how it works is key to properly evaluating
the performance and success of the
banking sector.
 4. Issues with the
current system

The current compensation system

fails to recognize the hard work and
talent of the employees and instead
focuses on providing incentives
based on the size of the bank. This
system of compensation also often
fail to identify and reward best
performers. Furthermore, due to the
larger wage gap caused by this
system, the working environment in
the banking sector is often
demotivating for the employees.
 5. Proposed changes to
the system

The need for greater wage equality, incentives for the best performers and a more motivating working
environment warrants the need for changes in the current compensation system. To provide for the same,
we propose the implementation of a merit-based system which will reward competency and performance
rather than the size and type of the bank. This system will also introduce a skill-based grading system to
ensure fair compensation and promotion for employees according to their knowledge and performance.
6. Conclusion

Conclusion
For a better banking system and
improved performance, it is clear that
changing the current compensation
system to one that is skill and
performance-based, is the best way
forward. This system will reward
employees according to their
knowledge and performance, while
eliminating any discrepancies in the
compensation based on size and type
of the bank.