This new phenomenon has worked well in many ways in setting the pace and direction of the economy in extremely depressing circumstances. One of the best examples in this regard is the State Bank, which broke the shackles of the ministry of finance and became an independent manager and regulator of the monetary policy purely through professional management.
Apart from brave decisions of the government, the transformation of the SBP has been made possible due to the leadership of Dr Ishrat Hussain. He embarked upon a number of capacity building initiatives, including training at all levels, automation of processes and induction of suitably qualified professionals from the market. The message was loud and clear for all the staff members that performance alone and commitment to the new vision were the main criteria for the SBP staff to grow and prosper in the new-look organization.
Similarly, the banks and the financial institutions were also given full autonomy to run their affairs through the respective board of directors. Heads of most of these organizations were also appointed from the market with relevant professional qualifications and experience. Majority of these institutions had the specific mandate to professionalize the setup quickly so as to become attractive for privatization. Despite induction of professional staff at the top level some of these organizations are faced with many internal challenges:
Organization structure: The structure of these organizations is typically hierarchical in nature. The general direction and superintendence of the affairs of business vests with the board of directors, appointed by the federal government.
Although the new board is empowered to take its decisions with regard to stewardship of the company, the change is a recent development and it will take time for these organizations to adapt to this change. Even today the policies of the government particularly those relating to human resource structure, including promotions, transfers, disciplinary procedures, secondment from other government departments in the form of deputation, compensation and benefits structure and overall human resource management continue to also apply to these organizations. Hence, the board or its chairman and CEO cannot take strategic business decisions without formal or informal approval from the government.
The reliance on the government’s direct intervention in executive level policy matters relating to the HR, operational policy framework and corporate strategy, despite the presence of board of directors, the chairman and the managing director leads to inordinate delays and renders these organizations’ management ineffective. All such issues are sent to the ministry, which may take time to accept, defer or reject any proposal sent by the management.
The inability to decide their own course of actions takes away ownership for responsibility delegated to the personnel at different levels within the company. The result is that duties are performed to the extent of utilization of resources of their own department rather than striving to achieve a clear business based goal. Eventually, under this structure, the development and growth of the company is hampered. Being unable to plan their actions and targets in the light of a larger perspective, the management is denied the evolutionary process of the corporate development.
The staffing situation at these organizations is usually much higher than the actual requirements. Most of the departments have a large portion of staff which is redundant. A clear indication is the fact that support functions such as personnel, administration, finance, services, etc., account for over 25 per cent of total staff strength. This is a very high ratio compared to any standards in any business in the private sector. The ratio of support function should not be more than 5 per cent of the total head-count. This is further compounded by the fact that most of these support functions are only performing maintenance function. They are not involved in any development work such as performance management, career planning, competency based training, incentive schemes to retain the most qualified staff, etc.
Problems and issues: Until recently, the current management of these organizations was not empowered to take policy decisions on its own. This was further compounded by the fact that the chief executive and other senior members of management team did not have a business mandate to run the operations on strategic business lines. Hence, there was no commitment and ownership from the top to achieve results that are based on strategic plans, goals and objectives and no targets and goals are set by the top management for themselves and other employees of the organization. In summary, dependence on the government to provide strategic direction takes away the creativity, commitment, and ownership of the top management that is necessary to make these organizations robust organizations.
The organizations are overstaffed resulting in inefficiencies and red tape. Although they may be autonomous bodies, the jobs are considered to be as secured as the government jobs. Even though the salary structure in these organizations is different from the government basic pay scales (BPS). There are no systems and processes to hold employees accountable for their performances against set goals and objectives.
Conclusion and recommendations: The above factors have combined together to exert a profound influence upon the operations of these organizations. Unless some drastic actions are taken to run these organizations on professional and business lines and some dynamic management style is installed at the top and heavy dependence on the government on strategic issues is minimized, the organizations will continue to stagnate. The current level of profitability will gradually erode as inefficiencies and status quo start to prevail.
Recruitment procedures: These procedures should be very simple. The ultimate responsibility of selection should lie with the department head concerned. The HR department should facilitate the entire process of advertisements, short-listing of candidates based on qualifications, experience and competency and initial screening. The department concerned should select the candidates. Only candidates for key positions and senior level should be evaluated by the chairman and the chief executive.
Training: The training interventions are not designed to relate them to staff career plans and job-related skills development. Instead of having various committees for selection of candidates for local and foreign training, the career planning cell in the HR division should be empowered to conduct training needs assessment of all employees. They should come up with annual training plan for employees.
Career development: At present, there is no system in the organizations to define clear career path for staff. The only tool available to assess the individual performance is the “annual confidential report”. The report is mostly subjective, old fashioned and has no-bearing with the competency and skill sets required for the job. The evaluation also does not take into account any details regarding the performance level achieved by an individual employee and their development and training needs. The career development plans should be aligned with the performance management system and training and development needs.
Compensation and benefits structure: The existing pay structure must be simplified and revised. Basic pay levels could be enhanced without making any major changes in the gross pay for the employees, making the administration of salaries a lot easier. The new salary surveys should be conducted with proper job matching for benchmark positions.
Bench marking should be done for job positions and not salary grades based on: job descriptions; level of authority; reporting line; decision-making authority; financial impact of decisions on business; academic qualifications and experience on the job; and many such factors used for scientific analysis.
Strategic business direction: There is strong need to strengthen the existing management by inducting professionals with entrepreneurial approach to business, having dynamic leadership qualities and a progressive outlook towards business. The group needs to develop a vision for the business and develop its mission objectives and strategic business goals to meet the challenges of the future.
For efficient handling of the operations, the number of departments should be reduced, support functions should be outsourced, and redundancies should be identified through performance measures and workload analysis.
Appropriately qualified and experienced staff should be inducted in the core business functions. Further, the business processes should be automated through implementation of the most suitable the ERP system and office communication and work flow management software. This would significantly enhance the efficiency and effectiveness of the organizational resources.
All non-core activities should be outsourced, preferably together with the employees who are currently performing these functions. Effective union negotiation should be carried out to phase out a large number of employees that are likely to be made redundant as a result of this restructuring. Proper legal framework should be developed to ensure full compliance with labour laws relating to workers’ rights and privileges.
Competency model of performance evaluation system should be introduced. Employee’s career development and training plans should form an integral part of the system. The human resources department should concentrate more on developmental aspects of employees rather than just remain a maintenance function.