Ob notes

Reward system in private organization

DIGIT #09

REWARD SYSTEMS IN PRIVATE
ORGANIZATIONS

NAME: SAIRA ARSHAD
TUTOR :PRVAIZ IQBAL
SUBJECT:ORGANIZATIONAL BEHAVIOUR

Digit #09{ROLL#AH531929} Page 1


TABLE OF CONTENTS:
Management of rewards and incentives
Reward superior performance
Improved working conditions at the field level
Performance appraisal
Potential appraisal
Performance review and counseling
Use compensation as a tool to motivate your people
Types of rewards
Equitable compensation
Determining rates of pay

Salary increases
Size of merit increases
Pay increases on promotion
General salary adjustments
Automatic salary progression
Anomalous salary
Salary reviews



Compensation and strategic HR Management
Corporate transformation and compensation strategy
Necessity of rethink approach to compensation
Forces affecting compensation
Compensation legislation and compliance
Role of legislation in private sector compensation
Compensation strategy and HRM
Effective reward system
Performance management
The Do’s and Don’ts of effective reward programs
ASKARI COMMERCIAL BANK REWARD SYSTEM &
ORGANIZATIOM BEHAVIOR
Leadership style
Performance approach
Appraisal methods & instruments
Methods &techniques of performance evaluation
Employee motivation

Ability


SWOT analysis
Conclusion
Recommendations
References



Management of rewards and
incentives

An important aspect of human resource management
which needs special attention in extension organizations
is the development of a reward system which will attract,
retain, and motivate extension personnel, as well as
provide training and promotional opportunities.
Extension organizations in Asian and African countries
have a poor reward system. The extension agents are not
only poorly paid but are paid late and after reminders or visits to head-quarters. Most of the
extension services are run by government agencies and operate under rules and regulations of
public administration. These rules do not have provisions for rewarding superior performance or
for a wage system based on merit. Promotion criteria are based on seniority and length of
service. Thus the bureaucratic structure of extension services is a basic hindrance to designing a
better reward system. Among many of the government departments, the agricultural department
and extension service have a low public esteem and poor pay structure.

The rewards and incentive system can be improved in several ways.

Rewarding Superior Performance:

Extension organizations have to develop a reward system which encourages superior
performance so that pay and wage administration will be an effective tool to promote
performance, motivation, and satisfaction. A clear job description, performance standards, and
performance appraisal will help in evaluating extension work and rewarding people for
meritorious service. Ways and means have to be found within the existing framework of public
administration for basing pay on performance. For example, extension workers on the basis of
their performance can be sent for higher education. Nonmonetary rewards such as recognizing
the good ideas of field workers or awarding honorable titles will also help in improving
performance. Extension personnel may also be encouraged to form professional societies to
develop and communicate high standards, as well as to recognize superior performance. A
professional monthly journal or newsletter can help extension agents to communicate innovative
ideas and reinforce superior performance.

Improved Working Conditions at the Field Level:

The reward system must also be internally equitable. The relative importance of field-level
extension functionaries has to be realized in terms of pay compensation and other amenities.
Lower level extension workers often have to work under unpleasant and isolated conditions. A
carefully planned system of field allowance will compensate this (Baxter, 1990). The living



conditions of field extension workers must be improved by providing adequate facilities for
housing, transport and medical and educational allowances for children.

. A career refers to all of the jobs that people hold during their working lives. Career planning is
the process by which employees plan their career goals and paths. Career development refers to
all of the technical and managerial skills employees acquire to achieve their career plans. Career
advancement, which gives a picture of future opportunities in terms of promotion, is a motivating
factor for performance and development of skills. Unfortunately, no career structure exists for
extension personnel in many organizations. In developing countries like India, there are many
cases where one joins as a village extension worker and retires in the same position after serving
thirty to thirty-five years. As part of improving the rewards and incentives system, extension
organizations have to develop suitable career paths and advancement for different categories of
extension personnel on a systematic basis.

As part of career development, extension personnel should be provided with opportunities to
develop their technical and managerial skills to enable them to occupy higher positions.
Extension personnel should have a salary structure as well as promotion opportunities
comparable to other professions like health or engineering. In Kenya, the pay and career
opportunities of extension workers are comparable to other government employees.
Recommendations have already been made to equate the status of agricultural extension with
that of agricultural research by offering an equal salary structure, professional advancement, and
incentives and rewards.

Performance appraisal
In the previous sections, we discussed how extension personnel are recruited and trained and
become part of a work group. These are all vital activities. However, the ultimate measure of
effective human resources within an extension organization is the performance of extension
personnel. Thus performance appraisal is important for effective human resource management.
Performance appraisal is a process of evaluating employee performance in order to guide and
develop the employee's potential. In many extension organizations which are government
departments, the performance appraisal is nothing more than a confidential judgments of work
done and a character report used to facilitate disciplinary action or promotion. The employees do
not get feedback about their performance. Extension organizations need to have an open
appraisal system to provide feedback and opportunities for open discussion with employees on
their performance, because they have immense potential to grow and develop. This system can
create a healthy working climate and employee motivation.

The performance appraisal which aims at facilitating employee development has the following
major purposes:

(1) To provide feedback and guidance,

(2) To set performance goals,



(3) To identify training needs, and

(4) To provide inputs for management of pay administration, rewards, and promotion.

The steps involved in effective performance appraisal are:

(1) Identification of key performance areas and setting yearly objectives under each KPA,

(2) Identification of critical attributes for effective performance,

(3) Periodic review of performance,

(4) Discussion of performance with employees, and

(5) Identification of training and developmental needs

Potential Appraisal:

The potential appraisal is a future-oriented appraisal by which the potential of an employee to
occupy higher positions and to assume higher responsibilities is evaluated. The potential
appraisal can help the extension staff to know their strengths and weaknesses and can motivate
them to further develop their skills. Thus the potential appraisal helps in planning overall career
development of employees. Some of the techniques used for the appraisal are self-appraisals,
peer rating, the management by objectives (MBO) approach, psychological test and simulated
work exercises, case analyses, and leadership exercises.

Performance Review and Counseling

An important purpose of the performance appraisal is to counsel and guide employees towards
greater job effectiveness. Thus a system of performance counseling is needed in extension
organizations. Performance counseling is provided by the manager to the subordinates to help
them in the analysis of job performance, identification of training needs, and finding solutions to
the problems which hinder job effectiveness. Counseling is an art of communication involving
two people - manager and employee. Counseling differs from training in that the former involves
a dyadic relationship and establishes more mutuality and confidentiality. The success of
performance counseling depends upon the employee's interest, a climate of openness and
mutuality, and the counseling process. Extension managers can use directive, nondirective, and
cooperative counseling



Use Compensation Strategy
as a Tool to Motivate Your People

The main objective of compensation strategy is to give the right rewards for the right employee
behaviors.

Compensation is an important motivator when you reward achievement of the desired
organizational results.

It is said "that money is a powerful source of motivation."

But it is also said that salary increase can only motivate until the next pay increase is due.

Imagine what the impact is if an employee is at the maximum point of his or her salary range.

Achievement of the desired behaviors is important in order to enhance your organization's
effectiveness. In turn, this increases the possibility of success.

Compensation strategy can reinforce the organizational culture that you desire. This is an
enabling organizational culture under which pay is linked to performance.

Your compensation policy must reflect your strategic business objectives.

This becomes all the more important when determining CEO compensation.

You must clearly define the objectives of your organization so that you can achieve them by
using compensation strategy.

These are communicated to everyone soon after a decision is taken. It can happen that good
decisions fail to achieve results due to poor communication.

By providing the right combination of benefits which are non-cash compensation your
organization can motivate employees and make them stay to help in its progress.

What is the strategy that we are talking about and how do HR strategies fit in? Click here to see
the hierarchical levels of strategy by Jack Welch.

Types of Rewards
There are two types of rewards, monetary and non-monetary.



Monetary rewards include salary, bonus, commissions, medical and health benefits, holidays,
and retirement benefits.

Among the non-monetary rewards are meaningful and challenging works, recognition and career
advancement, safe and healthy working environment, and fair treatment.

How You Can Make Good Use of Compensation Strategy
You can use compensation to attract and retain competent people. This objective requires you to
offer a salary that is not lower than the market rates.

When you want better customer service, reward employee behaviors that produce superior
service.

Do not harp on the amount of salary you are paying yet at the same expect good performance.
Your people may conclude that there is insincerity on the part of management.

Match the written policy with the right and appropriate actions that demonstrate to your
employees that you are a fair and just employer.

Equitable Compensation
Like employees working elsewhere in other organizations, your people are concerned with
compensation equity. Take this into consideration in drawing up your compensation strategy.

When people notice inequities, their morale and motivation will suffer.

Do not make it worse by maintaining pay secrecy. This indicates that you may not have an
objective and defensible compensation system.

Researches had shown that pay secrecy generates mistrust, and reduces motivation and
organizational effectiveness.

Of course, you are concerned about competitors inducing your people to leave. These
competitors may have the financial capability to pay better salaries and benefits.

But by adopting a compensation strategy, you don't have to worry about your good people
resigning. If they believe in your management's fair-handedness, it is very probable that they will
not go away.

Decision to leave an organization requires considerations other than or in addition to
dissatisfaction with compensation.



Determining Rates of Pay
Compensation strategy involves considering to adopt any of several ways in setting rates of pay.

Pay increase based on employee's length of time spent on the job.
This is seniority-based pay that is a good motivator in employee retention. But here, you are not
rewarding performance.
Performance-based pay is intended to motivate employees to perform better.
Such a plan is becoming more common whereby the manager and employee agree on the job
goals and performance criteria at the beginning of a specified period, usually at the beginning of
the year. The effect of this as a motivator can vary from time to time and from situation to
situation.
You can give pay increases based on job-related skills and knowledge.
This is intended to motivate your people to gain additional skills, acquire new competencies and
knowledge. Under this method, you do not pay employees for the job they are-doing, their job
title or seniority.
This is competency-based pay.

The second method appears the most reasonable. But you can include the elements of seniority
and competence.

An effective executive compensation is an important area of your organization's pay program.
Executives are among your key employees.

Salary Increases
Your compensation strategy needs to align your compensation objectives to your organizational
business objectives.

Salary increases are part of this plan. By this, you are recognizing employees' contribution to the
accomplishment of your organization's objectives.

Salaries are normally reviewed annually and an increase is given if the employee merits it.

There are times when you feel your organization cannot afford to give any pay increase.

So what do you do in order not to de-motivate your people?

Consider implementing a policy whereby employees are given salary increases when your
organization can afford to give them, in arrears. This ensures that good performers will continue
to perform. They know that they will get what is due to them.

In order to ensure that this is done properly, ensure that the annual performance appraisal is done
as usual. You need the employees' performance data.



Giving salary increase to an under-performer is not justified. There are organizations who have
implemented a policy that employees who are in the last five percent of the performance bracket
will have to go.

Size of Merit Increase
This usually consists of payment in respect of performance level. A merit increase that is
perceived as significant by employees can motivate them to perform better.

Make sure that your best employees are duly rewarded, the amount being sufficient enough to
motivate.

Ensure that your performance review is effective to reduce any possibility of wrong or biased
decisions made.

Pay Increase on Promotion
When an employee is promoted, you may or may not give a significant pay increase.

It is not justified to pay an overpaid employee a significant promotional increase. Consider all
relevant matters before you make a decision.

One important thing to consider is the pay parity with people in the same category and
performing similar tasks.

General Salary Adjustment
In performance-based pay, do not give across-the-board increases.

Differentiate between outstanding, average and non-performers. If not, your employees will lose
trust in the system, resulting in little or no motivational impact. Paying the right salary has
impact on employee performance and organizational effectiveness.

Automatic Salary Progression
This has no relationship to performance. Avoid it as it does not encourage your employees to
improve their performance.

This is fairly common in the public sector. But there are now significant changes made in
accordance with sound human resource management principles.

The only occasion where you can consider giving some salary increase that is unrelated to
performance is in respect of increase in the cost of living.

Anomalous Salary
If you have any employee whose salary is below the minimum for the job or too low in relation
to the employee's performance and experience, make the necessary adjustment.



This is in addition to an increase based on performance merit.

On the other hand, you may have an employee who is paid above the maximum point in the
salary range for the job.

You may freeze further salary increases until the relevant pay level is reached. Then give merit
increase based on performance. Don't give increase if performance is unsatisfactory.

Be careful in handling the situation where you do not see the reason for increasing an employee's
salary.

Conduct a salary survey whether your range maximum is lower than the markets rates. If so, you
may want to adjust the maximum range.

Communicate the results to the affected employees. It is also good if other employees know why
this is being done.

Do all of these as part of your compensation strategy.

Salary Reviews
Compensation strategy requires that the appropriate salary review method is adopted.

Fixed-date Reviews
Such reviews are usually on 1st January each year.

A modified version is to fix the reviews every quarter for different groups of employees
whose appointment fall within the respective quarter.

For example, 1st January review for those who joined the organization between 1st
January and 31st March.

Under this method, there is widespread comparison of salary among employees.

In many cases, this creates dissatisfaction. And it can affect employee morale.

Anniversary Reviews
Here, you review employees' salary at 12-month intervals from the date of their appointment.

This is a good method to reward good performance. But it is time-consuming and needs a
lot of effort.

Flexible-date Reviews
the interval can range from nine months to eighteen months.



You can use this method to adjust the salaries of high-performing employees whose
salary is low, say after nine months.

You can give an under-performer less frequent salary increases, say after eighteen
months.

A non-performer gets no pay increase. Issue a letter cautioning the employee to improve
his or her performance. This is required under the law. If this continues, issue a show
cause letter for poor performance.

Compensation and Strategic HR Management
none of the compensation systems is perfect. Human judgment remains an important element.

Try to reduce the subjectivity as much as possible. Provide the necessary skills training for
assessors.

Use compensation strategy to:

monitor cost-effectiveness
Are you getting good returns from the compensation methods that you have adopted?
verify legal compliance
Are there legislation that may prohibit the way your organization is managing its compensation
scheme?
determine pay equity
Are you using strategy to minimize or eliminate pay disparity in order to achieve maximum
employee motivation? and
link pay to performance
Is a performance-based pay implemented in your organization?

Corporate Transformation and Compensation Strategy
It is stated in a Report "Strategic Compensation: How to align performance, pay and rewards to
support corporate transformation" that it involves four strategic elements in a closed loop, or
continuous process. These are:

translating business issues into compensation or HR interventions
designing and delivering them with key objectives
leading the resultant change process, and
reviewing or evaluating the outcomes."
(www.business-intelligence.co.uk)

The Report finds that strategic compensation is a significant contributor to different forms of
competitive advantage, including



better business results
more effective performance
stronger capability
higher staff attraction and retention levels
heightened motivation, and
employee satisfaction.

But it cautions on the repercussions if it is poorly managed.If so, it can "de-motivate, is divisive,
create upheavals among employees or force good performers to leave."

In addition, you may find help from Martocchios' book ""Strategic Compensation: A Human
Resource Management Approach".

He mentions criteria in determining employee compensation, design of compensation system,
among other things.

Necessity to Rethink Approach to Compensation
Strategic compensation is the type of compensation that can achieve its intended purpose.
Compensation strategy is the course of action taken to ensure that this purpose is attained.

There is no excuse in paying salaries that make no difference in the performance of your
employees.

Brent Long Necker, a leading authority on compensation trends, planning and strategy in his
book "Rethinking Strategic Compensation" believes we need to rethink our approach to
compensation.

He provides "all facets of attracting, retaining, and motivating employees through a robust
compensation plan."

Forces Affecting Compensation

Effects of Market Forces on Compensation Strategy
Organizations operate in a dynamic market environment. There are times of plenty and
there are lean years.

This matter does not fail to catch our attention especially the effects of economic downturns.
Many people particularly corporate heads and leaders ask important questions how their
organizations can continue to exist.

One question that they cannot evade is on compensation.



You want your organization to continue in existence. And reducing the headcount will quickly
reduce your overheads.

You need people in order to survive. However, maintaining the same number of employees can
lead to bankruptcy.

So what do you do? This is a difficult question to answer.

Further, you need to ensure that your organization does not lose talent and needs to engage talent
that you need to help during the hard times.

You also need to pay attention to the retained employees so that they remain committed and
focused. Thus, the importance of preparing a compensation strategy.

You can consider the following:

Differentiate between top performers and non-performers and even
average performers. And reward them accordingly.
Reward top performers only. This may motivate mediocre performers to
contribute more.
Check the market whether your compensation system is competitive.
Clearly communicate to employees what their compensation package is
worth. Then negotiate on possible reduction for certain heads such as non-
cash compensation. Don't say demotivating words like "You are lucky you
still have jobs."
Make plan to achieve continued employee motivation at least in the short-
term.
Terminate non-performers, not good performers in sectors that are no
longer profitable due to the downturn.

We read from publications or hear from broadcasts that some people are not too happy that
organizations continue to pay incentives to executives during downturns.

Some suggest that cost-cutting is not the answer but implementation of compensation strategy.

We need to remember that whatever the economic situation or your organizational financial
performance is, formulating and implementing a compensation strategy will ensure the ever-
readiness of your organization.

Once in place, it is necessary to review the strategy at least yearly and whenever there is a need
to do so as dictated by events.



Compensation Legislation and Compliance
It is necessary for people in HR and those in managerial positions to know and understand that
the law affects your compensation and benefits system.

In the public sector, practically every aspect of employee compensation is governed by
legislation. In most cases, there is not much room for innovative ideas in formulating
compensation strategy.

The one good things about this is that the results are predictable at most times. But it can lead to
a lot of dissatisfaction.

Legislation specify job grades, salary band or range, salary increases, promotion, allowances,
benefits and so on.

When there are needs for changes, the legislation concerned is amended. Before any incentive or
a new allowance is given or paid the law must allow it. If not, nobody will or dares to take the
risk to go against the stipulated rules.

Some government agencies are usually given some authority under a subsidiary legislation
allowing their respective Board of Directors to make decisions. Such decisions must not go
against the provisions of the incorporation instrument.

Role of Legislation in Private Sector Compensation
Organization in the private sector are "free" to determine the levels and components of their
compensation package. They are "free" to determine their own compensation strategy subject to
legislation.

Private entities are not free to follow their whims and fancies in compensation matters.

National governments may enact laws forcing private organizations to change their
compensation system and practices. This can happen during times of economic recession when
sensitive matters such as compensation come under close public scrutiny. This will also happen
in response to sensible public opinion.

If this happens private organizations may not have much choice but to follow.

This can bring both positive and negative results.

Some argue that self-regulation is better and preferable. But some sort of basic framework is
necessary.



An example in which legislation may determine private entities compensation policy is when a
minimum wage is imposed. Here, organizations are "forced to agree". This affects you
compensation strategy.

This is a controversial issue. Employees at the lowest level and their unions look forward to it.
Employers Associations or Federation dread it.

Government officers may not know what further action they need to take. They are responsible
for implementation in which case they cannot go against against government policies.

Another real possibility where governments may intervene is when employees, unions,
community leaders, commentators and others believe that the cost of living (COLA) is getting
exceptionally high and they appeal for government intervention.

Your organization may want to offer salary increase to help people cope during hard times. In
this way, COLA become one of the factors in deciding the quantum of compensation.

Further, anti-discrimination laws have impacts on compensation.

We know that market forces impose "unwritten rules" on the compensation systems and thus
compensation strategy. Accepted norms such as in salary systems affect decisions of
organizations.

Apart from the enacted laws, the "common law" can shape compensation decisions. When cases
come before the law courts, judges interpret the law and refer to decided cases in deciding
whether compensation is payable or not. And if payable, the courts will also rule on the quantum
payable by the employer.

A lot of these cases are on unfair dismissal or constructive dismissal. In many of these cases
"compensation" specifically refers to the amount of back pay that the employer must pay to the
former employee.

The law courts will seldom award economic loss as compensation.

The courts may also rule that the employer take back the former employee to resume duties in
the same position and drawing the same salary. This may pose problems to the employer and
other employees.

Compensation Strategy and HRM
An HR executive like you, will understand "how compensation plans must align with
organizational design and corporate strategy."



Whatever you decide to do, it is good to remember that compensation and compensation strategy
are essential parts of a strategic human resources management plan.

Innovative Reward Systems for the Changing Workplace.

Thomas B. Wilson has written a book that is chockfull of guidelines and principles for designing
performance management programs. In his book, Innovative Reward Systems for the Changing
Workplace, Federal managers, program design teams, and human resource specialists will find
both theory and practical applications that will be extremely helpful when dealing with the
challenge of redesigning their current programs.

Wilson views rewards programs as including base pay, appraisals, and various kinds of awards.
That is why his book, which would appear to be solely about reward systems, includes an in-
depth chapter on managing performance. While the chapters on base pay and stock options don't
apply to Federal employees, the rest of the book is rich in practical, useful wisdom and
guidelines for designing new programs in any work situation.

Effective Reward Systems
Performance Management
The Do's and Don'ts of Effective Reward Programs

Effective Reward Systems. Reward systems should focus on positive reinforcement. Positive
reinforcement is the most effective tool for encouraging desired behavior because it stimulates
people to take actions because they want to because they get something of value (internally or
externally) for doing it. An effectively designed and managed reward program can drive an
organization's change process by positively reinforcing desired behaviors.

The author presents criteria for building effective reward systems that he calls the SMART
criteria. These criteria should be used when designing and evaluating programs. Programs should
be:

Specific. A line of sight should be maintained between rewards and actions.
Meaningful. The achievements rewarded should provide an important
return on investment to both the performer and the organization.
Achievable. The employee's or group's goals should be within the reach of
the performers.
Reliable. The program should operate according to its principles and
purpose.
Timely. The recognition/rewards should be provided frequently enough to
make performers feel valued for their efforts.



Performance Management. Wilson urges organizations to get away from thinking of the annual
performance appraisal process as performance management. He comments:

"I would recommend that the organization refocus the performance appraisal process away from
all the varied attempts to justify its existence and concentrate instead on the process of managing
performance."

The process of performance management reflects how the work gets done and creates the
environment in which people feel valued for their achievements. The performance management
process includes four critical components:

Focus on what is important to change or be improved.
Measures to determine whether and how much progress is being
achieved.
Feedback so that performers will know whether and how much
progress is being achieved.
Reinforcement so that everyone celebrates achievements as they
are unfolding.

Indicators of successful performance management include the
following:

All measures are understood by the employees, who can describe
the importance of their activities to the agency. Measures address
results and behaviors/processes.
A tracking system is used to monitor performance in the areas
identified.
The performance measures and progress are displayed in a public
area.
Data on the performance charts is current.
The team leaders/managers are actively engaged in coaching staff
members and providing assistance to improve performance.
Periodic celebrations mark achievements as they are realized.
These celebrations are regarded positively by employees.
Data indicate performance is improving.



The author recommends that organizations:

focus on variables critical to success;
create timely, chart-oriented feedback;
create celebrations that mean something to the performers;
use performance reviews as an opportunity to reflect "how we
won" and "how we lost" make them as often as necessary to
cement the learning;
anchor the memory of achievements achievement-oriented firms
measure a lot, accomplish milestones frequently, and do much
celebrating;
don't rely on annual performance appraisals as the sole source of
feedback;
when designing programs, avoid copying programs used by other
organizations; and
don't make the design process into the "let's make a form" game.

The Do's and Don'ts of Effective Reward Programs. The
Do's and Don'ts of Effective Reward Programs. Wilson
summarizes his book by reviewing the fundamental principles
for designing reward programs that work:
Do it now! Putting off change only makes the situation worse.
Keep your eye on the needs of the customer. The customer
should be at the center of all measures, goals, and objectives.
Take action, be proactive. Well-designed programs require
management, which should focus on providing people with
meaningful measures, real-time feedback, and ongoing
reinforcement.
Personalize rewards to their recipients. Rewards should be valued
by the performer. The performer needs to see that the reward


opportunities are directly linked to the effort and results taken
and that there is an appropriate benefit to the organization. By
personalizing the reward, you can anchor the meaning of the
achievement more deeply than if you simply treat the reward as a
mechanical administrative task.
Make sure everyone can win. Reward programs built on the
principles of competition or compliance is counterproductive, if
not downright destructive.
Make sure that rewards are contingent. Reward programs
become entitlement programs when they lose their contingency
on performance. Each reward should be fully earned and people
should understand exactly what they have done to achieve it.
Don't expect success all at once. The process of developing an
effective program is one of change and continual improvement.
Remember that you are in competition with other consequences.
Reward programs simultaneously compete with negative
reinforcements that occur throughout the organization. So
rewards must be meaningful to the performer to have an impact.
Do it from the heart. Rewards that are intended to be
manipulative are not accepted by employees. The fundamental
purpose of reward programs is to build a powerful partnership
between the individual and the organization. Collaboration is an
essential theme of success.
Have fun while you are doing it. If a job is worth doing, it is worth
measuring progress and celebrating achievements.

"In an organization where winning is recognized often, winning
becomes a habit."

ASKARI BANK AND ORGANIZATIONAL BEHAVIOUR:



Introduction of Askari Bank:
The bank was founded in 1992, and in the 15 years since, its growth and
success patterns have far outgrown industry standards. It is a matter of
pride for Askari to be able to offer one of the widest arrays of products
to its customers through its extensive branch network all over the
country. Just like innovation brings improvement, and progress offers
the promise of perfection. Askari bank is evolving, and its desire to grow
with time coupled with its employee’s firm commitment to maintaining
excellent standards of banking quality and services. International
Division strives to place at the disposal of our branch network, efficient
correspondent banking arrangements on global basis. The Legal Affairs
Division is responsible for managing all legal matters pertaining to bank.

Askari Bank’s Core Values:
Askari bank is committed to satisfy customer’s needs which must be
fulfilled within a professional and ethical framework. It subscribe to a
culture of high ethical standards, based on the development of right
attitudes. Askari bank believes in 'core values' as the essential and
enduring tenets of the organization - the very small set of guiding
principles that have a profound impact on how everyone in the
organization thinks and acts. They higher authorities give significant
importance to all employees. The intrinsic values, which are the corner
stones of Askari banks corporate behavior, are commitment, integrity,
fairness, team-work and service.

Organizational Behavior:
The main reason for this project was to analyze the behavior of the
employees and manager in the Askari bank. 26 permanent and 4
contractual employees are working under the supervision of Branch
Manager. The manager is working with this branch for 5 years. As he is
academically able to perform the job and Askari bank fulfils his
financial needs so he is working over here.



Leadership Styles:
The leadership style of manager in the Askari bank is a balance of both
people oriented and task oriented leadership and because of this balance
the employees are satisfied with their jobs and absenteeism, grievances
and turnover is low. The path-goal theory of leadership highlights four
styles of leadership.
1. Directive:
The manager of Askari bank clarifies the goals to be achieved by his
subordinates and means to reach those goals. The manager treats his
subordinated equally and maintains the discipline of the working
environment.
2. Supportive:
The employees of Askari bank can easily approach their manager
because their manager shows great concern for the status, needs and
wellbeing of employees. He provides social support to help employees
cope with stressful situations.
3. Participative:
The manager of Askari bank encourages and facilitates the involvement
of his subordinates in decisions. He consults with his subordinates and
ask for their suggestions and takes their ideas into serious consideration
before making a decision.
4. Achievement Oriented:
The Askari bank’s manager sets challenging goals for his subordinates
and expects high level of performance. He continuously seeks
improvement in their performance and shows them a high degree of
confidence that employees will accomplish their goals.

Feedback Sources:
Feedback originates from social sources as well as non-social sources.
1. Social Sources of Feedback at Askari bank:
Social sources of feedback include supervisors, clients, colleagues and
project leaders. The feedback at Askari bank is only given by the
supervisor means the branch manager for the employees working under
the branch manager. The branch manager observes the employee’s


behavior and performance throughout the year, and manager is the only
person who fills the annual confidential reports of the employees on
which the promotion, pay increments and other rewards depends.
2. Non-Social Sources of Feedback at Askari bank:
The manager at Askari bank looks at the daily reports of deposits and
loan disbursements and compares it with earlier dates and assigned tasks
and then gives the feedback. With the help of these reports, the manager
can easily analyze his employee’s performance.

MARS model of Individual behavior and performance:
The Askari bank depends on its employees to satisfy the customers and
fulfill other organizational objectives. For understanding the individual
behaviors and performance of employees, I used the MARS model.
PER FORMANCE APPRAISAL:
It is the key process to any organization try to increase or maintain its
effectiveness because the action of employees affect the optimal use of
the organizational capital, technological and marketing recourses
.Despite the obvious importance of marketing accurate appraisals of an
employees performance consist of a list of a key traits or cost related
variables. Both appraisals instruments are limited from the stand point of
counseling or developing an employee.

Give Employee Results Establish Performance Goal Praise/Reward
Performance Reviewing Legal Requirements :Before carrying out any
performance appraisal system the first step is to take into consideration
that what are the legal requirements. First the organization see that what
performance shave to be appraised and up to what extent and it is after
reviewing the laws the organization is ready to conduct job analysis.
APPRAISAL METHODS AND INSTRUMENTS
The methods used for appraisal of the employees are c a t e g o r i z e d i n t o
t wo b r o a d c a t e g or i e s . F i r s t i s t h e comparative method includes.
Ranking, forced distribution, paired distribution critical incident method
and essay approach. And the absolute standard method includes rating scales
which is further divided into graphic and non-graphic scales,
MBO(management by objective) and finally the combination methods.



Appraisal Methods Followed By " C o mp a r a t i v e methods" and second is the
"Absolute standard methods”. The Askari Bank
A s k a r i B a n k i s o u r l o c a l b a n k wh i c h i s t r yi n g t o i mp r o v e i t s
approval process and method used by them,. But at this point there are very few
methods used for the appraisal of the employees. Basically they use critical
incident method for the appraisal of the middle level managers.
METHODS / TECHNIQUES OF PERFORMANCE EVALUATION:
There are four methods of performance evaluation.

1. RATING SCALE:
In this method you have to give the rate to
i n d i v i d u a l performance on the scale basis, this method is precise
and simple as compared to other methods.
2. Check List:
The rater has to select only that statement which best
described the performance and individual. In order to measure the
performance, we can assign the weight to it will become weighted check
list, it will help to check the performance and this practical is standard.
3. Forced Choice:
It is a method of set choice. In this method you have
t o develop a set of employees and give them the numbers on rater's own
observation.
4 . Critica l Incidence Technique
In this method the rater has keep in account positive and
negative behaviors in sequence, these are called incident critical
techniques. At the end of year in ne

Employee motivation:
The employees working at Askari bank are motivated to achieve the
desired goal and complete the assigned tasks and they put forth enough
continuous effort for a certain amount of time to achieve their goal.
Ability:
The employees of Askari bank have the ability, knowledge and physical
and mental skills that are required to achieve the organizational goals.
They have natural talent that helps them to learn specific tasks more
quickly and perform them better.



Employee Competencies:
Employees at Askari bank have multiple competencies that includes
generic and job specific skills required for the job. The competence
triangle at Askari bank consists of three sets of generic and job specific
competencies.
1. Professional Competence:
The employees working for different products of the Askari bank like
Askari Home Financing, Askari Car Financing and Askari Agriculture
financing are specific to their task and position. The employees of these
departments have specific knowledge of their product.
2. Human Competence:
The employees of Askari bank, who are involved in customer relation
jobs for social interaction, have special communication skills required
for their job.
3. Business Competence:
The manager of Askari bank has a particular understanding of the
business language, customer skills and general knowledge of the
organization. He has the required business knowledge and it is his
business competence.

Person Job Matching:
At Askari bank, individuals and their competencies are being matched
with their jobs. For this they adopt two strategies, they select those
applicants whose competencies best fits to the job and train them to
develop required skills and knowledge.
Role Perception:
The manager of Askari bank clearly describes the responsibilities
required by the organization from them. Employees are also given
frequent performance feedback.

Behavior Modification:
As the staff of Askari bank knows that there is a system of annual
confidential report according to which their performance is analyzed and


rewards are distributed so they don’t get late for their work and complete
their task on time. This is the way how Askari bank successfully
implemented behavior modification, particularly to reduce absenteeism
and increase job performance and satisfaction by giving rewards.

Sources of Power in Askari Bank:
1. Legitimate Power:
The manager holds legitimate power which gives him formal and
informal authority to make others follow him. He has the power to make
his subordinated come on Sundays and stay for longer hours without
extra pay and employees abide by him.
2. Reward Power:
The manager has the control over the allocation of rewards. His formal
authority gives him power to distribute organizational rewards like pay
increment, appreciation letter, promotion.
3. Coercive Power:
As the manager have the formal authority with which they can demote
their employees, if he is not satisfied by any employee’s performance he
first warn the employee verbally then gives him written warning and
then termination letter is given to the employee.
4. Expert Power:
The manager and his subordinates of Askari bank have the knowledge
and skills required for their work on the basis of these expertise’s they
can influence the surroundings.

Sexual Harassment:
In Askari bank, they have a system of complain in case of any person
feel harassed and this system is completely confidential. If anyone teases
anybody, he/she can complain easily and without any hesitation.

Organizational and Team Environment:



The manager of Askari bank told me that the work is assigned in teams
and as the employees know that their performance is being observed so
they are motivated to work better.
1. Reward Systems:
The employees of Askari bank are partly rewarded for team performance
and this reward system make their team members work together more
effectively. According to the manager the individual pay at the Askari
bank is based on the combination of individual and team performance.
2. Communication Systems:
Communication system among team members at Askari bank is
designed very properly, as it is very important even, when team
members belong to one branch. Face-to-face dialogues and sometimes
telephonic conversations are also used by the team members for the
assignments and tasks.
3. Physical Space:
The layout of Askari Bank, improves the communication among team
members. Team’s ability to accomplish tasks is also influenced by the
environment of Askari bank.
4. Organizational Environment:
The working environment at Askari bank is very competitive which
motivates employees to work together more closely. Team’s output is
highly demanded by the manager of Askari bank, which creates feeling
of success in the team members, which motivate them to stay with the
team and organization.
5. Organizational Structure:
The organizational structure of Askari bank supports its teams and
encourages interaction with team members and the supervisor. As the
team members are organized around the work processes rather than
specialized task, so the team flourishes. The employees report to their
immediate boss. Decisions of branch are taken by branch manager and
his supervisor, employees can only suggest.
6. Organizational Leadership:
In the Askari bank, teams are given support and are also provided team
leader’s couching and training. The performance of teams also depends


on their team leaders to a greater extent as they have the authority to
solve their problems and have the resources to accomplish their tasks.

Team Norms:
The Askari bank does not support the team norms of absence, as the
employees cannot be absent from the work. The employees work for
longer hours, when it is required by the manager or team leader, became
a team norm.

Characteristics of Creative People:
There are four general characteristics which I am going to analyze in the
employees of Askari bank.
1. Intellectual Abilities:

The employees as Askari bank, comes up with ideas with great
significance, they evaluate the usage of their ideas and they also know
their ideas apply in the real world. The manager said that his employees
communicate their ideas and make me understand and support them.

2. Relevant Knowledge and Experience:
Employees of Askari bank possess knowledge and experience in their
field. As the people of accounts have complete command over it,
everyone has command over their tasks.

3. Motivation and Persistence:
The employees of Askari bank told me that they are motivated to work
for the achievement of tasks assigned to them. They continuously and
persistently work for completion of tasks and because of this motivation,
they spend less time and get more work done.



4. Inventive Thinking Style:
The manager of Askari bank takes risk for achieving organizational
goals. He and his subordinates come up various new ideas and after
analyzing ideas they take risk of applying these ideas in reality.
5. Creative Work Environment:
The manager said that if the employees have fear of job loss, they take
fewer risks. Team members trust each other, communicate well and are
committed to the assigned projects.

SWOT Analysis:
Strengths:
Competitive staff
Cooperative Executives
Islamic banking
Corporate & Investment Banking Group provides all
requisite banking services for our corporate clientele in an
efficient, dependable, consistent, and competitive manner –
the objective being to become your “bank of first call” for
all your financial needs.
The main strength is that they have provided the name of
person, designation, department and phone number for easy
contact for customers on their websites.
Askari bank established relationship with almost all top
manufacturers and dealers of Samsung, Philips, LG and
Dawlance.
At its website all the features of all the products are given
separately and the eligibility criterion is also given.

Weaknesses:
Profit rates are not higher than the competitors.


Loan rates are higher than the competitors.
360 degree feedback system not applied in Askari bank.
No break is given to employees, which sometimes make
them frustrated.

Opportunities:
The different products of Askari bank provides it with
opportunities as its competitors are providing loan on easy
term to the farmers for agriculture, livestock and vehicles
like tractors, Suzuki.

Threats:
Competitor
ABN Amro Bank
Saudi Pak Bank
Habib Bank
Muslim Commercial Bank

CONCLUSION:

There is all the reward systems are being discussed briefly which could
be there in an organization and which could possibly give to the
employees by the management of an organization. There is also defined
that how the reward system could effect the organization and also the
employees life on the work place, it is also defined that how the
compensation could be responsible for the betterment and success of a
working organization.

Recommendations:



I just want to add one thing that they would have to over come the
reference system and give the promotions who would be deserving not
to the person who has the huge reference or relation with some high
profiled.

References:

Internet

Askari commercial bank


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