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CHAPTER 1: INTRODUCTION
1.1 Introduction
In any organization work force is considered the life blood. It down the road,
assumes various denominations, designations, attributes, powers, meanings, strengths,
weaknesses, psychological advantages against other such small groups and some times
produce animosity, cruelty, harshness, indifference for other recessives subgroups.
The oft quoted feature usually appears in a large groups, institutions and
organizations working for a collective goal and targets. It is widely observed that groups
running various businesses at a time lack such transformation and variety of organization
psychological attribute. This is because in each individual working wing of the group, a
team spirit and sense of belonging among those wing members appears. The two sister
wings of a group may or may not conceive each other as rival but they enjoy a sense of
belonging among co workers in the same wing.
For instance a large group (ATLUS GROUP) running insurance firm, bank, car
manufacturing plant, trades company with different names but under one flag seldom,
experience tension inside the workers of any single subgroup or wing. They might
develop a sense of advantage, depravity, professional rivalry against other subgroup of
the same entity.
For instance insurance sales executive team might feel inferior to car sales team
but among each individual team the strong sense of belonging binds each other closely.
As far as a large organization is concerned where whole work force fall under same
category with no water tight demarcation, a different environment appears. For instance a
very strong administrative control of few executives yields the power circle, Then come
supervisors that report directly to administration, then comes the working group under
different designations and denominations.
© Adnan Rasheed 1
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
In this case the think tank, planners and human resource staff work independently
keeping humane feelings for the junior cadre. In such an organization, for instance a
bank(HABIB BANK), sale force , marketing force, consumer support executives , non
clerical , clerical , officer cadre , and then executives members constitute a team , a
staff, a representative body and assume a physical shape of the respective organization .
At this point of time any or all member reflects the behavior, temperament and stature of
that organization.
© Adnan Rasheed 2
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
The expected policy of downsizing will damage the high standards of efficacy,
professional expertise, and rapidity of execution and overall credibility of the
government. There has been a ban on jobs in the federal and provincial government
departments from the early 1990s. This irrational policy may spoil the social fabric,
economic prosperity and financial stability of the general intelligentsia and banks alike.
© Adnan Rasheed 3
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
In our country, the downsizing exercise was instigated in the public banks and
DFIs in 1997.The golden handshake scheme was offered to all the permanent employees'
at all hierarchical levels. The main philosophy behind downsizing was to save Rs20 to 30
million annually. The IMF, the World Bank and the State Bank offered to bear part of the
downsizing expenses. As of June 1998, a total of 22,642 banks/DFIs employees availed
of the golden handshake and the payment that was made to them was Rs29.1 billion.
The people of Pakistan are very emotional about their jobs and organisations.
They work hard for the betterment of their departments. Therefore, the sudden
downsizing would be a bolt for them. The major economic conditions of Pakistan are not
stable. There are huge internal and external debts, regional disparity, massive
unemployment, low mark-up structure, and deteriorating law and order situation, which is
negating all the efforts of the government for the quick economic revival and poverty
alleviation.
© Adnan Rasheed 4
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
Habib Bank has been a pioneer in providing innovative banking services. These
have included the installation of the first mainframe computer in Pakistan followed by the
first ATM and more recently, internet banking facilities in all its 1424 domestic branches.
It was HBL that introduced products such as Credit Cards, ATMs, Travelers Cheque, etc.,
to the Pakistani market.
© Adnan Rasheed 5
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
The Bank's towering presence in Pakistan's financial and commercial life has
remained unchanged over the decades. The strength of its brand and image is symbolized
by its prominent Head Office building that has dominated Karachi's skyline for 35 years.
Bank continues to build on its track record and in its quest for excellence it strives to
meet the needs of both its customers and its employees. Habib Bank aims to ensure
customer satisfaction by providing high quality banking services. This is made possible
by the professionalism of its employees all of whom are provided with the requisite
training and opportunities to enable them to realize their full potential.
Economic activities both for the Govt. & affectees. In less than three weeks that
fell between August 22 to September 13 a total of 6,495 executives and officers were
retired by the Habib Bank Limited and United Bank Limited. The downsizing exercise
initiated by HBL on the 22nd of last month and followed the UBL on the 13th of the
current has now spread to National Bank of Pakistan which has offered voluntary
retirement scheme to all its workers.
© Adnan Rasheed 6
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
The scheme offers an unique opportunity to boost long term investment & A
similar scheme has also been offered by one of the Development Financial Institutions,
the Agriculture Development Bank of Pakistan (ADBP) and is expected to be followed
by other DFIs soon. Besides, HBL also offered all 30,000 of its workers and staff a
voluntary golden hand- shake scheme and though the HBL president, Shaukat Tareen
expected that 10,000 employees would avail the offer, PAGE has learnt that only 6,500
HBL employees have applied to take advantage of the offer. On the other hand, the
president of UBL Zubyr I. Soomro has said that the downsizing in UBL is completed
and there would be no more retrenchment, mandatory or voluntary, at UBL.
Among reported 11,000 employees of the Habib Bank facing the axe of
downsizing, as many as twenty-five sportsmen will lose their job, but the officials
insisted the mass-scale retrenchment would not affect their cricket, hockey and football
teams.
© Adnan Rasheed 7
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
2. Relationship volume;
3. Relationship profitability; or
Research studies indicate that the employees satisfaction and job security provides
from two to three times as much profit as the traditional banking environment where the
fear of downsizing is present. Employees satisfaction encourage to have higher deposits,
more banking products, lower attrition and a lower service cost than downsizing fear with
similar demographics.
Thus, the research problem for this thesis can be formulated as:
How does downsizing and employee loyalty impact on profitability in HBL Limited?
© Adnan Rasheed 8
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
RQ1: What are the major reasons and requirements for implementing downsizing?
RQ2: How can employee's role are applied on organization?
RQ3: How employee's efficiency can be affected by the downsizing?
The down cycling organization loses its positive momentum and enthusiasm. A
vicious circle is formed. It snowballs. Bad feelings and depression become the norm
rather than occasional, until, in extreme cases, the organization becomes unable to move
effectively, and the work climate can become intolerable for everyone.
Because the process tends to be gradual, managers tend to assume that the
problems that occur early in the down cycling will solve themselves without attention. It
is easy to assume that staff will "get over" the effects of downsizing over time.
© Adnan Rasheed 9
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
This may be the fatal mistake, because if the process is left unmanaged, there is a
good chance that staff will become more demoralized. One final point on the down cycle
is in order. When an organization is close to the bottom of a down cycle, it is extremely
difficult to turn the organization around. This is because levels of trust, hope and
enthusiasm are so low that staff will have little faith in the effectiveness of any approach
that promises to be helpful.
© Adnan Rasheed 10
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
Hypothesis
H0 = Downsizing activities do not have any impact on organizational
effectiveness of HBL.
H1 = Downsizing activities activities have impact on organizational
effectiveness of HBL.
The financial services sector is one of the more obvious, and for the moment
visible, sectors undergoing dramatic structural changes in the light of a further
internationalization of the economy. In view of this, it is probably a good business
decision to engage in strategic mergers and other forms of alliances. It seems to be the
case, however, that those who make these decisions behave primarily as investors of
large capital and not as employers.
This has serious consequences for the impact on employment in a sector that has
already been placing increased emphasis on automatisation. Given the seemingly
irreversible characteristic of the current trend in the financial sector, unions are limited to
pleading for acceptable forms of "downsizing" and the introduction of flexibility.
© Adnan Rasheed 11
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
It seems to be the case that while many analysts are focusing on the vast amounts
of capital being merged and the gigantic profits for investors, little attention is being paid
to the possible impact on those earning a modest living as employees in the financial
services sector.
The significance of study, I think with my thesis interpret in the followings ways
to whom it may concerns.
I think, the significance of study may help in this regard would be in the
followings,
One of the most telling comments is often put forth by employees a year or two
after downsizing, and it goes like this: "Sometimes I think that the ones who were laid
off are the lucky ones". They usually go on to describe a workplace where employees
feel:
© Adnan Rasheed 12
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
It is easy to understand these effects when they occur close to the time when
down-sizing occurs, and remaining staff "grieve" the loss of friends and colleagues. But,
these effects are now being seen as long as one or two years AFTER the downsizing
period. There are indeed long term effects of downsizing that need to be addressed.
© Adnan Rasheed 13
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
1.8 Delimitations
The impact of Downsizing of the bank on Employees satisfaction from the time of
privatization.
The Branches belongs to Punjab only.
© Adnan Rasheed 14
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
2 Literature Review
Employees, nowadays, will have to reconcile with the ugly realities of the
corporate world and they may have to be prepared for alternative employment as the axe
may fall on anyone at any time. Due to the globalization of business, organizations are
able to develop a number of approaches by which to employ human resources,
technology, and capital to implement innovative projects in different parts of the world.
They are able to derive maximum advantage due to these possibilities. While the larger
goals appear justifiable and in the interest of most stakeholders, they lead to frequent
changes at the organizational, functional, and individual levels.
At the organizational level, such changes can lead to closure of businesses, off-
shoring, merging with another organization, outsourcing, restructuring, etc. At the
functional level, it can imply changes in the availability of resources, changes in the
scope of activities, etc. As a sequel to these developments, employees can be redeployed,
transferred, rendered redundant, or let go within a very short span, without adequate
preparation for these changes. Such changes take their toll in terms of organizational
productivity, nature of employer-employee relationships and the associated social costs.
People who contribute to the organizational goals are the organization's assets.
These assets are turned into liabilities due to reasons mentioned earlier. The challenge is
to what is morale manage employee exit without disrupting the organization's
functioning. Those individuals who lose jobs are the hardest hit. For the affected
employee, the emotional trauma of losing a job is very difficult to cope with. Aside from
the financial implications of a job loss, they have to reconcile with the loss of self-
esteem, self-confidence, and a breach of trust between the employer and the employee.
Along with the individual, his/her family also gets deeply affected with the involuntary
job loss of a family member. The pain is not limited to the individual alone but affects a
number of others. The effect is also felt by other employees who remain in the
organization as they suffer from the guilt and are also faced with the fear of job
insecurity.
© Adnan Rasheed 16
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
2.3 Morale
Morale, also known as esprit de corps, is an intangible term used for the capacity
of people to maintain belief in an institution or a goal, or even in oneself and others.
According to Alexander H. Leighton, "morale is the capacity of a group of people to pull
together persistently and consistently in pursuit of a common purpose".
Workplace events play a large part in changing employee morale, such as heavy
layoffs, the cancellation of overtime, canceling benefits programs, and the lack of union
representation. Other events can also influence workplace morale, such as sick building
syndrome, low wages, and employees being mistreated.
Job security.
Management style.
© Adnan Rasheed 17
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
The first few reasons include lack of recognition, disagreement with the culture or
direction of the company, poor treatment by their boss, lack of excitement about their
growth prospects, and poor relationships with co-workers. How much? When you add the
costs of finding an employee, training the new employee, lost productivity and filling in
for the employee who leaves, the cost can easily equal 150% of the base salary of the
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University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
person who left. So, if you are paying someone $50,000, the cost to replace that person
will be approximately $75,000. This money comes out of your hard-earned profits.
This is one of the key reasons that companies are focusing so much effort on
keeping their current employees. Some of the steps taken by companies to retain their
work force are:
© Adnan Rasheed 19
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
According to Theo Blackwell of The Work Foundation, in 1980s and 1990s many
companies resorted to downsizing their human resources in order to cope with economic
pressures. But what most of these companies do not realize is that downsizing does not
always lead to savings in reality or increase in the market worth of the company. On the
contrary, the downsizing companies may be branded anti-people. It usually leads to
repetitive downsizing and results in the loss of employee morale and loyalty and thereby
affects overall productivity levels. However, they can adopt alternative approaches to
cope with economic uncertainties. Wayne Cascio had proposed a new strategy termed as
"reflective restructuring", which enables companies to offer a range of smarter options to
employees. The article explains the significance of this new concept and provides
examples of companies in the US and UK which have adopted the strategy. It also
explains that while companies in the US are at a greater liberty to downsize, the UK
business environment is not amenable to such measures.
He outlines the causes that resulted in surplus manpower among PSUs. However,
after India opened up its economy, most PSUs were compelled to streamline their
operations to increase their efficiency.One of the major steps taken to achieve this goal
was to shed the excess staff on their payrolls through the "golden handshake," by floating
Voluntary Retirement Schemes (VRS) and Compulsory Retirement Scheme (CRS). The
other major step was to outsource non-core activities and focus on their core
competencies. The article provides a snapshot of the Indian experience of downsizing and
also discusses the social implications of these drastic measures.
© Adnan Rasheed 20
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
increase in the numbers. The article explains the need for tying rightsizing efforts with
the overall strategy, identifying critical growth areas as well as those needing
consolidation, analyzing the effects of rightsizing on all functional areas, evaluating the
financial implications, and ensuring that each department and employee adds measurable
value. The author illustrates how to carry out a rightsizing exercise with the help of a
process example, which describes the most important steps. In this connection, it cites the
examples of a few companies, such as Ernst & Young, Cisco, Agilent Technologies, and
Schwab, which have implemented rightsizing. The article also illustrates a few
alternatives to downsizing and highlights new workforce concepts, i.e., "Just-in-time"
workforce and the "Portfolio" workforce, to cope with fluctuations in business cycles.
Rick Maurer of Maurer & Associates emphasizes the need for organizations to act
swiftly to cope with changing business conditions and on their requirement of human
resources. Business leaders need to continuously assess the mix of skills required as well
as the number of employees required for the present and the future. In addition, they
should engage in a process of benchmarking with companies in the same industry.
The article explains that downsizing may prove to be a risky strategy that may not
always bring about much improvement in terms of the productivity or revenues to the
organizations. Hence, to cope with changing requirements of staff, companies should
consider a number of different alternatives to downsizing.
Sumati Reddy of the ICFAI University, Hyderabad, India outlines ways in which
employers can implement a well-considered downsizing program. If downsizing is
inevitable, organizations must pay due attention to the rationale for downsizing,
involvement of employees in designing the program, formulation of a fair and equitable
policy, Equal Employment Opportunity (EEO) guidelines, legal counsel, etc. The article
also suggests the use of objective data to formulate the downsizing plan. In conclusion, it
points to a few indicators to assess the effectiveness of a downsizing program.
© Adnan Rasheed 21
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
Mika Kivimäki, Jussi Vahtera, Jaana Pentti, and Jane E Ferrie reports the results
of a study conducted to investigate the effect of the psychosocial work environment on
employee health. This study was conducted among 1,110 municipal staff in Raisio,
Finland, between 1990 and 1995. It encompasses the period prior to downsizing, during
downsizing, and when downsizing had slowed down. The downsizing exercise was a
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University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
reactive one, conducted through retirement and hiring freezes, and letting go the
temporary employees. Some of the significant findings of the study are: downsizing
results in changes in work, social relationships, and health-related behaviours that lead to
increase in certificated sickness due to increases in physical demands, job insecurity, and
reduction in job control; sickness absence increases twofold in a major downsizing as
compared with sickness absence during a minor downsizing; downsizing was associated
with negative changes in work, impaired support from spouse, increased prevalence of
smoking, and sickness absence. It has been found that this study was unique in the area of
employee downsizing and employee health as it studied a natural experiment, which is
rarely feasible.
Jonathan Kelley explains that the significance of downsizing depends on its long-
term impact on workers. It presents a model to study the probability of re-employment
among workers shed by downsizing firms as compared with those departing from stable
or growing firms. This model can also be used to examine the impact of downsizing on
the duration of jobless spells, continuity or change in occupation, on earnings, and on job
satisfaction among workers who obtain employment. The model combines three factors:
re-employment by age, gender, and education.
Some of the significant findings of the study are: downsizing is not a disaster for
most of the workers; 75% of the downsized employees find jobs, and most of them do so
quickly; workless spells between jobs are short or non-existent; and the most serious
grounds for concern relate to groups of vulnerable workers, such as older workers and
women.
Carl Van Horn, William M Rodgers III, Neil Ridley, and Laurie M Harrington of
Rutgers, offers glimpses of the consequences of involuntary job loss for workers and their
employers. It describes the evident patterns of worker dislocation: it affects both blue-
collar and white-collar employees, workers of all races, ages, education levels,
occupations and industries; and it happens at very short notice (usually one week or less,
and many do not receive any advance warning). The report describes the impact of job
loss on individuals and their families, the most significant being emotional distress and
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University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
financial hardship. It delineates the differences in approaches by small and large firms.
Large firms offer more assistance and better severance pay as compared with smaller
firms. It also provides guidelines for employers, employees and policymakers to deal
with the consequences of job dislocation. The experience of downsizing employees
during the last few years points to the need for employees to be prepared for a job loss at
any point of time in their career. This report also includes examples of effective practices
of a few companies to bring succour to the displaced workers.
The decision to downsize is made for strategic and financial reasons. The
expectation is that the expense reduction will lead to a positive impact on the bottom line
and will ultimately be reflected in improved profitability and productivity. However,
many organizations neglect to factor in the psychological impact of downsizing on those
who remain. In fact, if downsizing is handled improperly, the problems it was designed to
correct may be intensified due to the impact on the loyalty and attitudes of the survivors.
© Adnan Rasheed 24
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
This seems to indicate that when there are high levels of job insecurity, as would
be expected during downsizing; employees with a high need to work will increase their
work effort, while those with a low need to work will have no change in work effort.
While this result is interesting, of more interest was the finding that variables moderated
this observed relationship. Specifically, Brockner found that the remaining employees'
perception of the fairness of the lay-off process and their attachment to the lay-off victims
colored their views. This issue of fairness has been found to be related to a number of
other work-related variables and has its roots in theories of organizational justice.
Theories of organizational justice propose that people attend to the processes used
to determine outcomes as well as to the end result in determining "fairness." For example,
as Brockner's study reported, the remaining employees considered the way in which their
co-workers were treated during the downsizing process as well as the outcome (i.e.,
losing their jobs). From this perspective, layoff survivors can be expected to exhibit the
most negative reactions when they identify with the layoff victims, and feel the victims
have not been well compensated.
© Adnan Rasheed 25
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
"When survivors perceived that those laid off had been dismissed with little or no
compensation, they reacted more negatively (from an organizational perspective) to the
extent that they felt some prior sense of psychological kinship with the laid-off parties."
What Brockner's study would indicate is that employees are affected by more than
just the fact of layoffs. They are affected by how the layoffs are managed and by what is
done for the individuals in those positions. Brockner found that negative attitudinal
changes were reflected in survivors' reduced work performance and lowered commitment
to the organization. Conversely, the study showed that employee commitment can
actually increase during a layoff process when the company shows some commitment to
displaced workers.
Downsizing is a stressful time for employees, and is a time in which they will
question each of the eight factors mentioned in the above quote by McKenna. By
communicating with employees, making them feel part of the organization, and working
© Adnan Rasheed 26
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
2.5.5 Communicate
During downsizing, the losses due to decreased employee loyalty, morale and lost
productivity are compounded by the complexity of the layoff process. For example, the
rumor mill that develops, or intensifies, during the preliminary planning stages results in
employees spending significant amounts of time gossiping and worrying about what may
happen. Unfortunately, many managers in the position of being "in the know" are guided
by a policy in which they are to avoid talking about rumors with employees.
While this policy may seem appropriate, the associated costs, in terms of lost
productivity and employee loyalty, may be significant. Communication will help to curb
the worry and re-direct employee energies to the job at hand (Fisher, 1988). "If you don't
know something, or you do know but SEC rules or other legal constraints have
momentarily sealed your lips, come out and say that. Silence is the worst policy" (Fisher,
1988). The most preferred method of communication is personal appearances from upper
management; however, any communication at all will be helpful.
Ensure that communications cover the following topics:
Talk about the fact that changes are coming; employees already know, but it will
increase their trust level if they hear it from you;
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University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
emphasize that laid-off employees will be treated with respect and dignity;
this is important for managing and maintaining remaining employees' moral
and company commitment.
Most importantly, listen carefully to employee concerns and adequately
address each concern to whatever degree possible. This must be done with
sincerity and no sense of condescension, such as "calming the mob."
In addition, justification for the layoffs is extremely important, especially if times are
good and the downsizing is a part of strategic growth and profitability. Employees need
to understand that you sincerely need to make these cuts and it is not a whim or a
mistake.
To stay or not to stay? That is the question some remaining employees ask in the
aftermath of their company's downsizing process—particularly those who have other
employment opportunities outside the company. When these employees see some top
managers leave voluntarily, they may question the long-term prospects for the company
and consider an immediate job change. This is something to watch out for, as the people
who leave under these circumstances are generally those with valuable skills and training.
A former West Coast bank manager who left when he saw his manager leave
made this comment for an article in Fortune: "If you let people get the idea that the
company is not just cutting back but is sinking into mediocrity, morale really goes to
hell" (Fisher, 1988). This quotation highlights the importance of managing perceptions
with "positive press" and communication from upper management. Discuss the
downsizing as a step towards a more efficient and profitable business with an attractive
future.
© Adnan Rasheed 28
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
© Adnan Rasheed 29
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
After the 1960s and early 1970s, the focus of the organizational climate field
became more clearly defined. More recently, organizational climate researchers have
begun to consider how organizational climates develop. Three schools of thought have
developed: the subjectivist, objectivist, and interactionalist perspectives.
Probably the most troubling issue that the organizational climate literature
continues to face is defining the appropriate dimensions that comprise organizational
climate. Organizational climate is a fairly general term which refers to a class of
dimensions which can be critiqued for being too diverse . In addition, the
multidimensional nature of organizational climate makes it more difficult to define
sharp borders. Organizational climate scholars have responded by making empirical and
theoretical arguments to distinguish organizational climate from various other const
ructs, such as structure and individual satisfaction. While these and other efforts have
been helpful, some fuzziness around the borders and differentiation of the
organizational climate construct still remains.
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University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
© Adnan Rasheed 31
University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
Make sure the number of climate areas included is kept to a manageable level.
Not only will including too many areas on the survey increase the time and effort needed
to administer the survey, but it also can make the interpretation process more difficult. On
a related issue, many users of organizational surveys find it useful to add a few
customized items to the survey. Although adding items does not always add to the
scientific value of a survey, it can go a long way in generating support from the
company’s management team.
It can be extremely helpful to choose a survey that offers some flexibility in its
administration capabilities. For example, some companies may require the ability to
administer the assessment using a paper-and-pencil format, while others may prefer an
intranet format. Factors such as employee demographics can be important, also. Some
companies may require both an English and Spanish version of the survey to
accommodate all of their employees.
Finally, identify some general pieces of information you would like to see in a
report once the survey responses have been analyzed. For example, some companies may
have an interest in only reviewing the average levels of item responses within the
company, while others may want to see how the company scored compared to other
companies throughout the nation.
In addition, some companies may want to have results broken down department-
by-department or item-by-item while others may want one set of analyses based on the
entire set of employee responses. In any event, the publisher/director of an organizational
survey should assist a company in selecting an instrument that will meet their specific
reporting needs.
2.6.4 Benefits
Companies that conduct organizational climate surveys may experience one or
more of the following benefits:
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University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
Positive work outcomes- In the last 30 years, a significant amount of evidence has
been accumulated documenting the importance of the work environment in relation to
organizational performance. In general, research has shown that factors in the work
environment are related to outcomes such as employee motivation, job satisfaction,
intentions to quit, job performance and even organizational productivity. In addition,
an emerging area of research has indicated that organizational climate can influence
customer perceptions of the quality of goods or services delivered by a company.
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University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
surveys offer a national normative database that can be used to facilitate comparisons
across a variety of conditions and industries.
2.6.5 Tips For Creating An Effective Organizational Climate For Minimum Employee
Down Sizing
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University of the Punjab
IMPACT OF DOWNSIZING ON WORKFORCE
Case Study of Habib Bank Limited
Originally written about downsizing within the public sector, the points in
this article are no less applicable to any organization that is forced to undergo
downsizing. Interestingly enough, almost all surveys and research examining
the long term effects of downsizing indicate that companies that downsized
ended up disappointed in the results. Layoffs may serve a short term need, but
create huge longer term issues. Few government departments or branches have
escaped the necessity of downsizing. The last three or four years have brought
almost constant cuts in staffing, and some departments have been "hit" several
times. For many downsizing has become an annual process. When managers are
faced with downsizing, they tend to focus on the immediate and practical needs
that emerge at the time when staff are being let go. After all, employees need to
be selected and notified, one of the most difficult tasks for any manager. Jobs
responsibilities need to be shuffled, and generally the period where downsizing
is occurring is very busy and emotionally taxing.
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It is easy to understand these effects when they occur close to the time
when down-sizing occurs, and remaining staff "grieve" the loss of friends and
colleagues. But, these effects are now being seen as long as one or two years
AFTER the downsizing period. There are indeed long term effects of
downsizing that need to be addressed. Understanding The Organizational Down
cycle. To counter-act the long term effects of downsizing, managers need to
understand how organizations slip into "down cycles".
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should also be a time when the organization's mandate and vision are revisited. It should
be a time when the manager dedicates him/herself to the long-term health of the
organization by clarifying, supporting and building trust. Above all, this is the time where
the manager's prime responsibility is to communicate, both with staff, and with
executives. One focus of communication should be clarifying mandate, vision, priorities
and commitment levels.
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managers use planned change to help the organization to adapt to external problems and
opportunities. When organizations are caught flat footed, failing to anticipate or respond
to new needs, management is at fault.
How each of these activities is handled depends upon the organization and
managers’ styles.
Forces for organizational change exist both in the external environment and
within the organization.
Internal forces for change arise from internal activities and decisions. If top
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managers select a goal of rapid company growth, internal actions will have to be changed
to meet that growth.
Evaluate the
Downsizing
Compare pre
change
performance
with post
change
performance
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The external and internal forces translate into a perceived need for change within
the organization. Managers sense a need for change when there is a performance gap—a
disparity between existing and desired performance levels. The performance gap may
occur because current procedures are not up to standard or because a new idea or
technology could improve current performance.
After the need for change is perceived, the next part of the change process is
initiating change, a truly critical aspect of change management. This is where the ideas
are developed.
Search
Search is the process of learning about current developments inside or outside the
organization that can be used to meet the perceived need for change. Search typically
uncovers existing knowledge that can be applied or adopted within the organization.
Managers talk to friends and colleagues, read professional reports, or hire consultants to
learn about ideas used elsewhere.
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Creativity
If creative conditions are successful, new ideas will be generated that must be
carried forward for acceptance and implementation. This is where idea champions come
in. The formal definition of the idea champion is a person who sees the need for and
champions productive change within the organization.
Personal energy and effort are required to successfully promote a new idea. Often a new
idea is rejected by the management. Champions are passionately committed to a new
product or idea despite rejection by others.
Creative culture, idea champions and new-venture teams are ways to facilitate the
initiation of new ideas. The other step to be managed in the change process is
implementation. A new, idea will not benefit the organization until it is in place and
being fully utilized. One frustration for managers is that employees often seem to resist
change for no apparent reason. To effectively manage the implementation process,
managers should be aware of the reason for employee resistance and be prepared to use.
Techniques for obtaining employee cooperation are:
Resistance To Downsizing
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Idea champion often discover that other employees are unenthusiastic about their new
idea. Members of a new-venture group may be surprised when managers in the regular
organization do not support or approve their innovations. Several reasons for employee
resistance are:
Self-Interest
Employees typically resist a change they believe will take away something of
value. A proposed change in job design, structure, or technology may lead to a
perceived loss of power, prestige, pay, or many company benefits. The fear of
personal loss is perhaps the biggest obstacle to organizational change.
Uncertainty
Uncertainty is the lack of information about future events. It represents a fear of
the unknown. Uncertainty is especially threatening for employees who have a low
tolerance for a change and fear the novel and unusual.
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resistance but to diagnose the reasons and design strategies to gain acceptance by
users. The strategies for overcoming resistance to change typically involve two
approaches: the analysis of resistance through the force field technique and the
use of selective implementation tactics to overcome resistance.
It’s the process of determining which forces drive and which resist a proposed
change. To implement a change, management should analyze the change forces. By
selectively removing forces that restrain change, the driving forces will be strong enough
to enable implementation. As restraining forces are reduced or removed, behavior will
shift to incorporate the desired changes.
Implementation Tactics
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Coercion. Coercion means that managers use formal power to force employees to
change. Resisters are told to accept the change or lose rewards or even their jobs.
Coercion is necessary in crisis situation when a rapid response is urgent.
Top Management Support. The visible support of top management also helps
overcome resistance to change. Top management support symbolizes to all
employees that the change is important for the organization.
The last step in the change process is to evaluate how successful the change effort
has been in improving organizational performance. Using measures such as changes in
market share, profits, or the ability of manages to meet their goals, managers compare
how well an organization is performing after the change with how well it was performing
before. Managers also can use benchmarking, comparing their performance on specific
dimensions with the performance of high-performing organizations to decide how
successful the change effort has been.
Now that we have explored how the initiation and implementation of change can
be carried out, let us look at the different types of change that take place in organizations.
The types of organization changes are strategy, technology, products, structure, and
culture/ people. Organizations may innovate in one or more areas, depending on internal
and external forces or change. In the rapidly changing toy industry, a manufacturer has to
introduce new products frequently. In a mature, competitive industry, production
technology changes are adopted to improve efficiency.
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Structure
Technolog
y Strategy Products
Culture/
People
In the diagram, the arrows connecting the types of change show that a change in one part
may affect other parts of the organization: a new product may require changes in
technology, and a new technology may require new people skills or a new structure.
The general rule is that technology change is bottom up. The bottom-up approach
means that ideas initiated at lower organization levels and channeled upward for
approval. Lower level technical experts act as idea champions—they invent and
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These findings mean that the ideas for new products typically originate at the
lower levels of the organization just as they do for technology changes. One approach to
new product innovation is called the horizontal linkage model. In this model people from
research, manufacturing and marketing departments meet frequently in teams and task
forces to share ideas and solve problems. Research people inform marketing of new
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The top-down process does not mean that coercion is the best implementation
tactic. Implementation tactics include education, participation, and negotiation with
employees. Top-down change means that initiation of the idea occurs at upper levels and
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is implemented downward. It does not mean that lower-level employees are not educated
about the change or allowed to participate in it.
“Top 10” list of guiding principles for downsizing management, some of steps that the
company can take:
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Dealing with these issues on a reactive, case-by-case basis puts speed, morale, and results
at risk. A formal approach for managing change — beginning with the leadership team
and then engaging key stakeholders and leaders — should be developed early, and
adapted often as change moves through the organization. This demands as much data
collection and analysis, planning, and implementation discipline as does a redesign of
strategy, systems, or processes. The change-management approach should be fully
integrated into program design and decision making, both informing and enabling
strategic direction. It should be based on a realistic assessment of the organization’s
history, readiness, and capacity to change.
2. Start at the top. Because change is inherently unsettling for people at all levels of an
organization, when it is on the horizon, all eyes will turn to the CEO and the leadership
team for strength, support, and direction (govt. in case of PTCL). The leaders themselves
must embrace the new approaches first, both to challenge and to motivate the rest of the
institution. They must speak with one voice and model the desired behaviors. The
executive team also needs to understand that, although its public face may be one of
unity, it, too, is composed of individuals who are going through stressful times and need
to be supported. Executive teams that work well together are best positioned for success.
They are aligned and committed to the direction of change, understand the culture and
behaviors the changes intend to introduce, and can model those changes themselves.
3. Involve every layer. As transformation programs progress from defining strategy and
setting targets to design and implementation, they affect different levels of the
organization. Change efforts must include plans for identifying leaders throughout the
company and pushing responsibility for design and implementation down, so that change
“cascades” through the organization. At each layer of the organization, the leaders who
are identified and trained must be aligned to the company’s vision, equipped to execute
their specific mission, and motivated to make change happen.
4. Make the formal case. Individuals are inherently rational and will question to what
extent change is needed, whether the company is headed in the right direction, and
whether they want to commit personally to making change happen. They will look to the
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leadership for answers. The articulation of a formal case for change and the creation of a
written vision statement are invaluable opportunities to create or compel leadership-team
alignment. Three steps should be followed in developing the case: First, confront reality
and articulate a convincing need for change. Second, demonstrate faith that the company
has a viable future and the leadership to get there. Finally, provide a road map to guide
behavior and decision making. Leaders must then customize this message for various
internal audiences, describing the pending change in terms that matter to the individuals.
5. Create ownership. Leaders of large change programs must over perform during the
transformation and be the zealots who create a critical mass among the work force in
favor of change. This requires more than mere buy-in or passive agreement that the
direction of change is acceptable. It demands ownership by leaders willing to accept
responsibility for making change happen in all of the areas they influence or control.
Ownership is often best created by involving people in identifying problems and crafting
solutions. It is reinforced by incentives and rewards. These can be tangible (for example,
financial compensation) or psychological (for example, camaraderie and a sense of
shared destiny).
6. Communicate the message. Too often, change leaders make the mistake of believing
that others understand the issues, feel the need to change, and see the new direction as
clearly as they do. The best change programs reinforce core messages through regular,
timely advice that is both inspirational and practicable. Communications flow in from the
bottom and out from the top, and are targeted to provide employees the right information
at the right time and to solicit their input and feedback. Often this will require over
communication through multiple, redundant channels.
7. Assess the cultural landscape. Successful change programs pick up speed and
intensity as they cascade down, making it critically important that leaders understand and
account for culture and behaviors at each level of the organization. Companies often
make the mistake of assessing culture either too late or not at all. Thorough cultural
diagnostics can assess organizational readiness to change, bring major problems to the
surface, identify conflicts, and define factors that can recognize and influence sources of
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leadership and resistance. These diagnostics identify the core values, beliefs, behaviors,
and perceptions that must be taken into account for successful change to occur. They
serve as the common baseline for designing essential change elements, such as the new
corporate vision, and building the infrastructure and programs needed to drive change.
Company culture is an amalgam of shared history, explicit values and beliefs, and
common attitudes and behaviors. Change programs can involve creating a culture (in new
companies or those built through multiple acquisitions), combining cultures (in mergers
or acquisitions of large companies), or reinforcing cultures (in, say, long-established
consumer goods or manufacturing companies).
9. Prepare for the unexpected. No change program goes completely according to plan.
People react in unexpected ways; areas of anticipated resistance fall away; and the
external environment shifts. Effectively managing change requires continual
reassessment of its impact and the organization’s willingness and ability to adopt the next
wave of transformation. Fed by real data from the field and supported by information and
solid decision-making processes, change leaders can then make the adjustments
necessary to maintain momentum and drive results.
10. Speak to the individual. Change is both an institutional journey and a very personal
one. People spend many hours each week at work; many think of their colleagues as a
second family. Individuals (or teams of individuals) need to know how their work will
change, what is expected of them during and after the change program, how they will be
measured, and what success or failure will mean for them and those around them. Team
leaders should be as honest and explicit as possible. People will react to what they see
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and hear around them, and need to be involved in the change process. Highly visible
rewards, such as promotion, recognition, and bonuses, should be provided as dramatic
reinforcement for embracing change. Sanction or removal of people standing in the way
of change will reinforce the institution’s commitment.
Most leaders contemplating change know that people matter. It is all too tempting,
however, to dwell on the plans and processes, which don’t talk back and don’t respond
emotionally, rather than face up to the more difficult and more critical human issues. But
mastering the “soft” side of change management needn’t be a mystery
Most of the major conflicts in HBL belong to the category of policy driven
conflicts. After privatization of HBL, it had a major change in its structure and policies.
This change was necessary to overcome key problems associated with the structure of the
public owed company such as:
Over Staffing
HBL before privatization had more than 31000 employees, management and non-
management, they aimed to reduce this number to 27000 employees with the help of its
new policies.
Political Pressure
Before privatization HBL was highly influenced by the governmental policies as it was
the largest financial institute under government control. The economic policies of the
country were also affecting the bank’s policies. The problem occurred mainly because of
the unstable political situation in Pakistan which was causing the huge fluctuations in
governmental policies resulting in the inconsistency of HBL’s policies which led to the
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Other issue
In 2002: HBL employees perceived that it is their right that their child / children get
employed at HBL but HBL followed merit based system and they were interested in
hiring skilled employees to satisfy the company’s as well as stake holders’ expectations.
2.8.1.1Negotiation:
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forward their point of view that usually is against the management. Mr. Amin uses his
experience and expertise to minimize the conflict and to achieve the BATNA (Best
Alternative To a Negotiated Agreement). He makes the employees agree to most of his
demands if not all he drags the employee to agree on two or three points at least by
making employees compromise on most of the issues. His preference remains that
management by any means should not compromise and if incase he fails to do this he
moves to the next phase that is of mediation.
2.8.1.2Mediation:
Despite trying hard, when the negotiation process fails HBL goes for the
mediation process, where the role of an effective, neutral mediator comes in who acts as a
communication bridge between the management and the employees. Usually the
mediator is in HBL is a trusted manager popular amongst both employees and managers
HBL’s mediation process can be broadly divided into the following three stages:
During the first stage, the mediator plays a passive role. The main task is to gain the trust
and acceptance of the conflicting parties, so that they begin to believe that he/she will be
capable of assisting them fairly as a person on whom they can rely at all times for this
purpose HBL chooses a mediator with the mutual consent of employees and the
management. Mediator in HBL is usually an internal, neutral person trusted by both
management and employee. He leaves most of the talking to the disputing parties, but
listens attentively and asks probing questions to pinpoint the causes of the dispute,
obstacles to a possible settlement and to identify the issues in order of priority. Once
credibility is achieved and sufficient background knowledge gained, the mediator may
begin to persuade the parties to resume negotiations, possibly with a fresh perspective.
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In the second stage, the mediator intervenes more actively in steering the negotiations.
He/she may offer advice to the parties, attempt to establish the actual resistance point of
each party and to discover areas in which compromises could be reached. The mediator
encourages parties to put forward proposals and counter-proposals and (when a solution
appears feasible) will begin to urge or even pressurize the participants towards
acceptance of a settlement.
In the final settlement the mediator decides to finish the matter quickly, he/she uses bi-
lateral discussions with individuals or groups and during the final stages may actually
suggest or draft proposals for consideration. In the event of a final settlement being
reached, the mediator assists the parties in the drafting of their agreement, ensuring that
both sides are satisfied with the wording, terms and conditions of the agreement.
2.8.1.3Arbitration:
When even mediation fails to work for HBL it goes for arbitration. The delay in
court cases has always been a source of concern to HBL as this impacts the enforceability
of contracts. As most of the conflicts are policy driven HBL’s utmost priority is to
enforce those policies on employees at any cost and without compromising when all the
methods fail to achieve this purpose, HBL goes for arbitration with the consent of
employees and make them realize that it was important for the benefit of organization.
Arbitration is used in HBL because arbitration awards are generally easier to enforce than
court judgments.
2.8.1.4Litigation:
HBL has lawyers who take care of its legal formalities. HBL believes that even if
the conflict gets failed to resolve and the employees file a lawsuit against them the
management is least bothered about it because it believes that employees don not have
enough resources to fight in the court where as HBL pays a fee of about 400000 Rs to
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their designated lawyers who are expert in dragging the time of the hearing and making
employees willingly take the case back. According to Mr. Amin ul Huda they still have
cases in litigation and none of them yet got resolved or turned out in the favor of
employees.
Firstly, the resolution process although aimed at minimizing the overall level of
conflict but it was not fulfilling its purpose and was not able to minimize the overall level
of conflict giving rise to other more severe conflicts. Therefore, it can be said that the
resolution process did not completely satisfy the interests of all the parties and when at
one hand it managed to satisfy one stakeholder, left dissatisfactory results for others or
the organization itself. Example at the time when organization made a decision to go for
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downsizing, their major concern was to make redundant lower level staff i.e. drivers,
peons etc to hire a better, more skilled personnel at the same rate so that they can offer
more to the organization since the lower level staff was being hired at a rate far above the
market rate increasing costs for the organization.
2.8.2.2Lack Of Pre And Post Dispute Analysis:
HBL lacks a pre and post dispute resolution analysis this means that there is no
analysis or interpretation of where the organization wanted to be and where it actually is
after implementation of the process of resolution and there were no proper guidelines
giving directions to take about the conflict resolution process. Hence, this resulted in
failure in having effective resolution process and there was no proper comparison or
evaluation of whether the organization has achieved its desired state can be done giving a
rather blur picture to both employees and management and leaving them confused about
whether implementing such a process is cost and time worthy in the future since they do
not know the pros and cons of this system.
For example, when HBL decided to downsize and make certain employees quit,
they were not completely sure of whether doing so is likely to give them the desired
outcomes rather they were just hitting the ball blindfolded and simply hoped to achieve
what they want .furthermore, when HBL went towards retrenchment, and successfully
but with great difficulty achieved it, managers did not do any proper formal analysis with
the top executives of what were the difficulties they faced and how to make sure they do
not reappear in the future when they take such a crucial action. Also, there was no
evaluation of results the conflict appearing from retrenchment brought to them.
Moreover, no analysis of how to implement safety measures to avoid facing the same
conflict again was done.
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Apart from this, the resolution process instead of satisfying all the affected parties
at the end brought more dissatisfaction and complaints at its end making managers feel
the loss of time HBL have invested while engaging in resolving conflicts when at the end
it brought no fruitful results for either the employees or HBL.
As the process did not manage to satisfy all or most of the parties and caused
more conflicts in return, it became a basis for more personal conflicts among individuals
which adversely affected the work relationships and the organization’s productivity as a
result. Therefore, the process did not promise to foster effective long term relationships
among colleagues giving rise to feelings of hatred and emotional disparity among
employees in the same department or between an employee and manager.
Example, in the case of HBL’s formal dress code policy, the manager pointed out
an individual in front of his junior colleagues making him feel insulted and hating the
manager for doing so, causing him to feel demoralized to perform any task given by the
manager with eagerness and finding ways to back bite and bad mouth the manager with
other employees.
The dispute resolution at HBL does not assure management that employees can
safely and effectively challenge management. This is because such an act is not possible
with employees who do not have enough resources or power to raise a voice making
them insecure of their own jobs. moreover employees have a great degree of fear in their
minds of authoritative management situation which does not aim at collaboratively
discussing issues and then implementing an offer or demand rather just order employees
in shape of surprises or written messages .Therefore, employees do not have a say in their
own organization and this fear and lack of understanding with HBL’s management leave
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most of the conflicts un surfaced and unresolved portraying a fake picture of happy and
content employees towards management.
2.8.2.6LAck Of Employee Empowerment
Because employee empowerment was lacking, the employees do not feel the need
to contribute towards the organization benefit and just work for the sake of securing their
jobs, positions and dignity among others since raising a voice means openly exposing
themselves to chances of being dismissed or transferred.
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2.8.2.8Inflexiblity Of Application
Example, during the union negotiation sessions, the union representations are
forced to agree on management’s choices and issues through a sound mediator whose
popular and in good books of all employees and someone who the employees look up to
so that management can get the other party convinced at its point on emotional grounds
and can satisfy its demands at the cost of leaving its workforce feel dissatisfied and
simply being won on emotional rather than professional grounds.
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2.8.3 HBL Did Not Involve Employees In Policy Implementation And It Amplifies
Problems In Dispute Resolution Processes Of HBL
While resolving conflict HBL did not balance competing interest of both the
organization and the employees and the senior managers specifically were not
collaborating with the employees to present the best opportunity to meld them in ways
that are mutually beneficial for both the system and the employees. They were not willing
to contribute their information, expertise and energy in order to give benefit to each other
while resolving conflict due to which many problems arises in dispute resolution
processes of HBL. The management did not allow employee participants to get involved
in the process of implementation of policy and due to which employees did not gain a
better understanding that why management were implementing this policy, what was the
goal of the organization and what will be the future outcomes after implementing this
policy. While resolving conflict management does not allow employees to challenge
conventional wisdom and management’s mental models by participating in dialogue and
employees were not able to convey their view of what really goes on in the workplace
and what issues are real and not real.
When the dispute resolution process persisted, management did not effectively
communicate the result to all employees due to which they were unable to understand the
extent or level of reduction in conflict. Moreover, while resolving conflict at HBL, their
management did not conduct employee surveys that request written input on the issues
being considered in the dispute resolution process and did not give emphasis to employee
focus groups that facilitate discussion of the issues being considered and did not invite
oral feedback from employees about their perception in the whole dispute resolution
process.
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2.8.4Policies Were Not Updated And Employees Were Not Well Aware About The
New Policies In HBL
The workforce and the nature of work have changed dramatically in HBL over the
years, and they continue to change with the increasing speed more specifically in banking
sector but HBL did not keep their employees well informed about the new policies. The
management of HBL did not address the changing need of employees in their policies
due to which further conflict arises. The managers and policy administrator did not
continually implement, administer and reexamine and change all of an organization’s
policies by keeping in mind the changing needs of employees with the passage of time
and with the ups and downs in the economy but rather than that they just focus on the
company’s interest and the growth of the organization and did not update policies at the
exact time when it was actually needed. The policies did not intend to ensure workplace
effectiveness, justice, fairness and peace among the employees at HBL because the
management did not update policies when needed.
2.8.5Management At HBL Did Not Balance Forces For Change And The Forces For
Stability While Resolving Conflict
In the dispute resolution process of HBL management just focuses on forces for
change and did not focus on balancing the forces for stability as well. When the
management did not focus on balancing both the forces, it takes too much time to resolve
conflict because the forces for stability are at one side and they continuously make effort
not to adopt changes at HBL whereas HBL wants to achieve its target by mainly focusing
on forces for change and they surprise employees while announcing the policy and did
not give acceptance time to employees. In resolving conflict, the drive to change did not
exceed the target’s resistance and did not create a disequilibrium that unfreezes the status
quo. While resolving conflict, the resistance which is the action of the targets to maintain
the status quo further increases.
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They did not conduct such discussion in which the employee is advised of his
discharge is the single event most likely to occur in order reduce the cost and for the long
term growth for the organization. In the dispute resolution process, the person holding the
discussion was not fully trained and the meeting was not be carefully planned often
scripted and rehearsed because the senior manager did not fully aware about the facts and
reasons behind the conflict. They did not use person to person discussion when advising
individuals of a dismissal for downsizing instead they use a hybrid of both phone call and
other impersonal communication. While resolving conflict, the senior manager did not
directly get to the point and present the bad news and they did not stated the reason for
the termination in a few short sentences and did not tell the person that he has been
terminated due to which the expectation level of employees further increases.
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The management cop out and make the discharge seem unjustified in an effort to
avoid hard feelings. The management of HBL also did not listen to what the employees
has to say and answer their questions honestly and concisely. The management while
resolving conflict did not explain initially all severance details about how long the
employees will be paid, how insurance will be handled , references, outplacement
services and other information of importance the employee being discharged. They did
not even explain the exit procedures such as when and how the employee should vacate
the workplace.
In the past, employment at HBL was typically seen as long term relationship
between HBL competing in expanding markets and hourly wage workers or salaried
managers. But today’s employment relationship at HBL is very different. Increased
participation of young workers and fresh graduates, the prevalence of part-time or
temporary workers, increased risk of permanent job loss, and other similar factors have
changed the basic employment contract and introduced continuing uncertainty into the
employment relationship for the remaining employees after retrenchment as well due to
which problems arises in the dispute resolution system and the main problem is that while
minimizing conflict, another issue of job security for the temporary and for the remaining
employees arises as well.
2.8.9 Management Did Not Provide Proper Confidential Avenues (No Proper
Counseling Or Discussion Platform)
Management of HBL did not ensure that the dismissal discussion itself was
private means that it was not conducted behind closed doors but also handled so that
employees in general do not know it was taking place. The management did not carefully
consider that what information was to be shared with the remaining employees, who have
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a legitimate interest in what has happened. Employees did not believe that the dispute
resolution processes will foster fair resolution of the process and fulfill their rights.
Employees felt that supervisors and managers forgot about their feelings and they
thought only about the interest of the organization while resolving conflict. Other
managers fail to take needed action because of the potential cost and disruption to the
organization. While resolving conflict, delaying appropriate discharge allows bad
behavior to spread to others, impacting the broader organization performance. The
management did not thoughtfully balance the potential pros and cons of dismissing
employees while resolving conflict. In the dispute resolution process, the management
did not ensure that affected employees have an opportunity to present their case, with
help from an employee union representative if requested. Initially the management did
not clearly articulate a defensible reason for all dismissals. The management did not
provide for a pre decision review by higher levels of management, a peer committee,
external lawyers, or other knowledgeable individuals.
There was no formal ADR policy statement at HBL that establishes the rules for
resolving disputes, provides due processes, and fosters a full understanding of the dispute
resolution options available to the organization’s employees and because of this further
problem arises in the dispute resolution system. There was no fair and impartial
investigation of disputes.
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It is time that the organizations such as HBL realize that conflict cannot be
resolved by firing the coach or trading a player. Conflict is inevitable. If it is handled
well, it can lead to constructive dialogue, needed change and ultimately resolution. If it is
handled poorly or left unresolved, it can disrupt relationships, affect on the job
performance and lead to costly and time-consuming litigation. A dispute resolution
system preserves relationships, provides durable resolution of disputes, preserves
confidentiality, avoids litigation, and maintains management’s control over the process.
Large businesses are finally embracing Dispute Resolution Systems in the workplace and
are finding that a majority of conflicts are being resolved.
about her couch potato husband, her unruly teenager or her desk chair that is hurting her
back. These complaints cannot be ignored and must be addressed. Many large
organization views a dispute resolution system as only addressing filed actionable claims
such as sexual harassment, discrimination, workers’ compensation or wage and hour
violations. However, a dispute resolution system addresses all conflicts in the workplace,
whether they are actionable claims, other workplace disputes or personal employee
complaints. For the co-worker who has to listen to the personal complaints of a co-
worker, this can create an intolerable working environment. For the employee who has
many personal issues, this must affect her work performance. Many personal complaints
or workplace disputes are usually a precursor to a claim that is actionable. Addressing
those conflicts will make happy employees and decrease the actionable disputes. This
does not mean that the employer becomes a therapist (Moreno, 2004).
2.9.3 The Identification Of The Natural Emergence Of A Person Who Handles All
Conflicts
Organizations are fortunate because usually an employee emerges who has the skills
and talents to handle disputes. This person is liked by the employees and the employees
confide in this person, because the person listens, keeps all complaints confidential, is fair
minded and knows who to approach to resolve complaints. This person becomes an
ombudsman. The person is trusted by both management and non-management and is not
necessarily a human resource professional.
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dispute resolved. And the management at HBL should take keen interest and identify who
this person is and how he can affect the conflicts and the environment and how to with
tackle him (Moreno, 2004).
Organizations sometimes try their best to resolve disputes internally, but some
employees see the internal methods as an employer dominated system with no chance of
a fair resolution. HBL should embrace external features. And they should recognize that
proceeding to binding arbitration is costly. As a result that before any formal claim is
filed; they must offer the employee the use of external mediation, by an independent
mediator. HBL’s management must offer a list of mediators and the employee chooses
the mediator, after the employee has had an opportunity to speak with the mediators
regarding their credentials or bias in favor of the employer. Providing the use of external
mediators that are not associated with the organizations assures more neutrality. It has
been seen and believed that a system that utilizes both internal and external features,
demonstrates to the employees that the employer values the employees by spending time
and money to have a dispute resolved by a neutral party (Moreno, 2004).
Many organizations complain that they do not have the resources to implement a
dispute resolution system. It does not take monetary resources to resolve conflicts.
Resolution of disputes involves an employer’s willingness to address conflicts, to listen,
and to take steps to resolve them. Conflicts have to be addressed and there is an employee
who has the natural attributes to handle employee conflicts as mentioned above.
Management should tap in on those resources and before knowing it, management at
HBL will easily develop a workplace dispute resolution system, without expending large
sums of money (Moreno, 2004).
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Management at HBL should update the policy regularly with the changing times
and needs. A workplace dispute resolution system is similar to a house, it can stay
standing for 50 or 60 years, but during those years it needs to be remodeled with updated
parts in order to replace those components that have worn out or retired. A workplace
dispute resolution system is an ongoing process that is ever changing and requires
continual assessment. The framework may stay the same, but a change in management or
new disputes may arise that will require different methods to address those disputes. If
the workplace dispute resolution system evolves from the ground up, there is more
likelihood that the framework will remain but the methods used in resolving disputes may
change. It is a continuing metamorphosis (Moreno, 2004).
When HBL was a public entity, the bureaucratic attitude of management was
okay, but as soon as it is privatized, the expectations, needs, interests of people have
changed so there is a need to change and implement such a friendly and different
environment that everyone feels comfortable and satisfied.
Finding a way to satisfy both parties in a conflict will ultimately be good for the
company. Management should take such steps that when resolving a conflict none of the
party remains unsatisfied, i.e. none of them feels that their interests and needs are not
considered or fulfilled and ensure them satisfying both sets of concerns.
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HBL needs a pre and post dispute resolution analysis so that there is a proper
analysis or interpretation of where the organization wants to be and where it actually is
after implementation of the process of resolution and also there are proper guidelines
giving directions to take about the conflict resolution process. Hence, it should be
unproblematic to realize that whether the organization have achieved its desired
objectives and state or not.
2.9.6.4Ethical Management
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In HBL, they lack effective resolution process, they should see if their dispute
resolution process is effective or not in resolving conflicts, and also they should see that
the same thing and conflicts does not repeat and rise again, i.e. they should learn from the
conflicts.
Management should create such an attitude and should be flexible enough, that
employees come to them openly and freely with their problems. And management should
create an environment for employees so that they feel that their interest and needs will be
considered and valued.
In order to build trust, openness and respect among management and employees,
management should use collaborative power rather than coercive power.
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Management should take the initiative to provide the same and standard information
to its employees regarding the change and implementation or any other important step, as
it will help then in keeping all of them in the same page. And also this is how there is no
miscommunication and misinterpretation of messages.
The dispute resolution process should foster a healthy and long-term relationship
between employees, colleagues and management, in order to ensure work relationships
and increased organization’s productivity. That will definitely eliminate feelings or
hatred, dissatisfaction not only among employees but also managers, management and
employees.
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Ask what alternate behavior could have been used (Weeks, 1992).
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Ask them to put themselves in HBL’s shoes to understand how HBL was affected
by their behavior (Weeks, 1992).
Focus on the positive by reminding them of past examples when their fair
behavior resulted in good partnership resolution (Weeks, 1992).
Win/Win: work towards wins for both Parties. Turn opponents into problem
solving partners (Torr, 2004).
Get agreement from both Parties about a basic willingness to solve the problem
(Torr, 2004).
Let each Party say what the problem is for them. Check back that each Party has
actually understood the position of the other Party (Torr, 2004).
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Encourage Parties to look for answers where everybody gets what they need
(Torr, 2004).
Not all organizations face the same kind of conflict nor all conflicts can be
handled the same way as handled previous ones. Sources of conflict range from a
difference of opinion, difficult working conditions, or unrealistic work expectations
through to discriminatory behavior such as racism or sexism, poor communication, or
non-compliance with organizational norms or values. Instead, HBL can learn about any
flaws and mistakes in the conflicts arising, in order to minimize the likelihood of
conflicts in the future.
Conflict can be between individuals and groups, groups and managers, groups and
groups etc.
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There was no specific department named or titled conflict management and didn’t
exist in HBL however two departments look after the disputes and their resolution they
are Human Resource and IR and Disciplinary department which aims to resolve pre exist
problems. Other organizations also do not have specific department. Example: Toyota’s
management (pre examinant). So it is not necessary to have any special department or
subdivision for resolving and handling conflicts instead, the more important thing is the
dispute resolution system, how it is designed, carried out and implemented, is it effective
or not. In HBL this all is handled by HR, IR and disciplinary department.
Forces such as socio political environment also increase the likelihood of conflicts
occurring in the organizations. As people work together, know each other interacting with
each other they get mixed, start socializing and start forming groups. And many of the
people are very much concerned about who is getting what rewards, appraisals etc. Also
professional jealousy also exists i.e. politics.
System: Input – Process – Output
Feedback is of 2 types: Internal and External. It’s very important for the company
to have strong feedback cycle in order to minimize conflict and uncovering the
suppressed conflicts. Providing and listening to feedback is certainly something they
spend a lot of time doing in their own office. A Marketing Director eagerly recognizes
that client feedback is a better indicator of her performance than close ratios and costs-
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per-lead. Facilitation staff meets regularly to review the feedback and determine which
things will be continued, which HBL will be done less of, and which will be stopped.
Feedback begets change. Internal feedback is just as important as external feedback, and
sometimes harder to get. Even if the team isn't the type to offer feedback (positive or
constructive), one can establish systems that will facilitate those processes, over time
making feedback a component of the company’s culture. The final outcome is a set of
Major conflict that arose was of overstaffing. HBL was then very much concerned
not to supply too many employees. Overstaffing can create problem in ways that a work
of 1 person is done by many people, also resources and other possessions are spent on
them, which is a waste, so downsizing was needed at HBL. Overstaffing can become the
reason of de-motivation, ultimately affecting the core objective of the organization that is
maximum profitability as it increases cost. (Example of other government owned
institution is PIA)
Arbitration:
Arbitration did not exist with this particular name at HBL but do work with this
unorganized way. The appointment of an independent person to act as an adjudicator (or
judge) in a dispute, to decide on the terms of a settlement. Both parties in a conflict have
to agree about who the arbitrator should be, and that the decision of the arbitrator will be
binding on them all. Arbitration differs from mediation and negotiation in that it does not
promote the continuation of collective bargaining: the arbitrator listens to and
investigates the demands and counter-demands and takes over the role of decision-maker.
People or organizations can agree on having either a single arbitrator or a panel of
arbitrators whom they respect and whose decision they will accept as final, in order to
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resolve the conflict. Arbitrator is a legal person and his decision will be followed by both
employees and management.
CBL Negotiations:
Official negotiations are also done at HBL, when things get out of control or are
not solved through arbitration. Depending upon the situation and time, the way the
negotiations are to be conducted differs. The skills of negotiations depend and differ
widely from one situation to the other. Negotiation process takes one month at HBL. It is
at times beneficial in the organizations in order to resolve conflicts.
Pay raise issues mostly create conflicts, when bonuses, rewards are not
given at proper time and in proper amount. These kinds of problems
also rise because of the inflation
KESC employees (around 7000 employees) argued for their right, but government did
not support them. i.e. a difference of interests and rights or "Disputes of right"
and "disputes of interest"
Downsizing:
In 1997: 29000 employees were working at HBL they were downsized to 13000;
the case is in litigation now. In organization they have complex and heterogeneous
structure. In these cases HBL has no issues or problems because a certain amount goes to
the company’s lawyer every month, and he handles the case. But the people involved or
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individuals seek difficulties because lawyer’s fees are expensive and they can’t afford
these fees for too long.
Re-entrenchment:
In 2002: HBL employees perceived that it is their right that their child / children
get employed at HBL but HBL followed merit based system and they were interested in
hiring skilled employees to satisfy the company’s as well as stake holders expectations.
And that’s the right choice, because if they started hiring on sources HBL will be biased
at hiring employees, instead the best way is to hire on merit, who are more capable
candidates.
MCB and UBL transformed but they overcome their conflicts less than HBL,
HBL is growing transformational 10% more than them because they re-entrenched the
employees very peacefully gave incentives and bonuses.
Driver’s salary exceeded Rs.20000. This is wrong because an MBA now a day’s
hardly gets a job of Rs. 10000, and a driver was given Rs.20000, which is a big
difference. So it was decided after downsizing that the driver’s salary will be included in
each executive’s salary, and now it’s his choice to hire a driver or not, and that driver’s
salary is around Rs.7000.
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Competing Internationally:
One of the reasons for HBL was also that HBL competes internationally that is
why it has to hire skillfully appropriate workforce and for that they need to create space
to accommodate them. HBL manages conflicts better than other companies.
Outsourcing of Employees:
Employees such as peons, guards, and drivers were outsourced from another
company. This is because in order to avoid conflicts in a way that nor there will be a
similar staff nor there will be groups, and there will be least probability of conflicts
arising.
Management’s Role in resolving conflicts:
Mediation takes place after negotiation, if employees resist accepting new terms
and sticking to two or three points. This takes place when employees and groups are not
at all ready to accept the decisions of the management and they call for strikes, threats
etc.
The Mediator:
Then mediator talks or deals with him on the basis of his talent, personality and
skills. Mediator in HBL is a well known and popular among both employees and
management and he/ she is the person who knows well the goal of organization that as
the competition increases has to be reduced by covering extra cost, expenses as it hinders
the growth of organization that is the penetrating disease. Mediation drag the employee to
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agree on further two or three points but still in the employee do not agree on even one
point arbitration takes place.
At HBL there are no permanent operational employees hired instead they all are
hired on a temporary basis contracts.
Personality conflict chewing pan, talking loud on cell phone, Negative attitude of
employees are monitored by these councils. Most of the time employees did this on
purpose to give an impression that they are more powerful than the management. These
conflicts at HBL have also rise, such as not following the dress coat, negative attitude or
any practice against the terms mentioned in the code of conduct. Accountability or check
the dress code and other matters at regular intervals is necessary in any organization
2.10 Summary
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3 METHODOLOGY
In this chapter, the outline of the methodology that is used in the research and the
theoretical basis behind the approach and their definitions will be explained. After
mentioning the research purpose, according to research process onion, the first layer
raises the question of the research philosophy. The second layer considers the subject
of the research approach that flows from our research philosophy. Thirdly, the research
strategy will be examined and the fourth layer is about time horizons which are applied
to the research. In the fifth layer data collection method will be identified, and then the
validity and reliability of the research will be explained.
3.2.1 Experiment
Experiment is classic form of research that owes much to natural sciences and
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3.2.2 Survey
Survey method is very popular and common business strategy research. Surveys
allow the collection of a large amount of data from a sizeable population in a highly
economical way. Based mostly on the questionnaires, the data are standardized and allow
easy comparison. It is also easily understood. But much time is spent in designing
and piloting the questionnaire. After that on analyzing the results even with the aid of an
appropriate computer package the disadvantage is that by the survey method the data
collected may not be as wide ranging as those collected by qualitative research
methods. There can be limited number of questions. Another threat is that the
questionnaires might be answered not completely by the respondents. There are also
other data collection devices that belong to the survey category such as structure
observations and structured interviews where standardized questions are asked from
all interviewees. Questions “what” and “how” tend to be more the concern of the survey
method.
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3.2.5 Ethnography
Ethnography is to interpret the social world the research subjects inhabit in the
way they are interpreted. This is obviously a research process that is very time consuming
and take place over an extended period of time.
After the discussion all of the considered factors were accepted. after
finalizing the factors the questionnaire of those researches were combined together,
then among those questions some had little changes, some were eliminated, some
were added and the rest were not changed. Then a complete translated questionnaire
was ready.
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3.3.2 Longitudinal
Longitudinal, a study in which an individual or a group of individuals is
observed over a period of time.
3.4.1 Sampling
If we collect and analyze data from every possible case or group member, this
will be termed a census. However, for many research questions and objectives like this
research it will be impossible to collect or analyze all the data available owing to the
restriction of time, money and often access. Sampling techniques provide a range of
methods that enable us to reduce the amount of data that is needed to be collected by
considering only the data from a sub-group rather than all possible case elements As in
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this study there are many constraints on budget and time for surveying the entire
population and it is impracticable to survey the entire population, sampling provides a
valid alternative to the census (Saunders et al., 2000).
3.4.1.1 Population
A population consists of all elements-individuals, items, or objects-whose
characteristics are being studied. The population that is being studied is also called
the target population (Mann, 1995).The population in this research consists of the
bank customers.
According to (Cooper and Schindler, 2003) the formula for calculating the sample
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size is as below:
(+,-) 0.05 = desired interval range within which the population proportion is
expected (subjective decision)
1.96(σρ) = 95 percent confidence level for estimating the interval within which
the population proportion is expected (subjective decision)
σρ = 0.0255= standard error for the proportion (0.05/1.96)
pq = measure of sample dispersion(used here as an estimate of the
population dispersion).
n=pq /σ2ρ
In this research, after running the 30 questionnaires, a sample size was calculated.
And the result shows 280 questionnaires.
N= 0.24*0.76 /0.0255 2 =280
In order to have an accurate model I ran 400 questionnaires, and I got 392 back. From
this number, 388 were completely useful. So again at the end of he research I tested
the above formula to see whether the sample size was enough or not. The result
shows that by 295 questionnaires would be enough, but as I mentioned above I had more
questionnaires.
n= 0.26*0.74 / 0.02552 = 295
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First the duplicated questions were omitted. Then because of the different
environment between the banking industry of Pakistan and other countries, questions had
to be checked to see whether they needed localization changes or not. Some of the
questions were edited for this reason. And a few questions were added to some of the
factors. After that they were translated accurately to Farsi for being simple to be
understood by the respondent.
The questions in the questionnaire tried to find the factors of customer loyalty in
Pakistan. The above opinions were measured by requesting respondents to indicate,
on a five-point Likert-type scales, anchored on “1 = to a very little extent” through “5 =
to a very great extent”, their agreement or disagreement with a series of statements
that characterize the factors for loyalty model of the customers in banking industry in
Pakistan.
Likert scales were developed in 1932 as the familiar five-point bipolar
response format most people are familiar with today. These scales always ask people to
what extent they agree or disagree with something, approve or disapprove something
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and believe something to be true or false. There's really no wrong way to do a Likert
scale, the most important thing is to at least have five response categories (Likert,
1932).The questionnaire also contained some personal questions to reach to some
contextual sense of the answers collected such as name, age, position, etc.
Although these questionnaires were used before but because of the little
changes that have been done I needed to have a pilot test. The pilot test was done in three
stages. The first stage was done by some banking experts to see whether the factors of
this model are proper in this environment or not. All of them agreed with the factors
except the factor “trust” which was in the m-commerce model, and the reason is
because of the different nature of these two industries.
For this reason, I ran a short questionnaire to see whether this factor could have
influence on the loyalty or not. The questionnaire with its analysis results are shown in
appendix B. approximately all of the respondents mentioned that they trust the banks in
Pakistan and by having this result and the experts’ comments this factor wasn’t used.
The next stage was done for becoming sure of the simplicity of the questionnaire.
So 20 questionnaires were given to the customers of the bank to see whether the
questions were understandable or not. In this phase I was beside each customer
during the filling process and I took notes of all of their comments. After doing the
pilot test some little editing was done. The last phase of the pilot test was done by
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30 customers to see whether every thing was ok with the questionnaire or not.
Fortunately I got the positive answer.
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3.5.1 Reliability
3.5.2 Validity
3.5.1 Reliability
This is about the results of each investigation, which have to be reliable. If
nothing changes in a population between two investigations for the same purpose, it is
reliable. (Robson, 1993) asserts that there may be four threats to reliability:
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3.5.2 Validity
Validity is concerned with whether the findings are really about what they appear
to be about (Saunders et al., 2000). There are three tests for validity:
3.5.2.1Construct validity
Construct validity, establishing correct operational measures for the concepts
being studied.
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The empirical data collected have a lot of problems in analysis, its viability,
handing, missing scenarios and its outliners are aspects that relates with its
interpretations. My data is mainly constituted on the questionnaires and interview’s
answers. I selected the most valid data through inferential & descriptive statistics
methods.
35%
30%
25%
low
20%
10%
high
5%
0%
very high
low 35%
very low 20%
high 25%
very high 20%
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50%
45%
40%
35%
30%
20%
one month to 5 month
15%
more than 5 months
10%
5%
0%
25%
20%
extremely dissatisfied
15%
10%
neither satisfied nor
dissatisfied
very satisfied
5%
extremely satisfied
0%
extremely 20%
dissatisfied
very dis satisfied 25%
neither satisfied 25%
nor dissatisfied
very satisfied 15%
extremely satisfied 15%
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30%
25%
20%
5%
much more negative than
positive
0%
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5. Experiences Are More Negative Than Positive, What Factors Are Responsible.
Select All That Apply.
10% my co-workers
my compensation
5%
change in compensation
0% package
company savings plan
my 25%
performanc
e evaluation medical benefits and
and the insurance
outcome
relocation
my role, 10%
responsibilit
y and/or title vacation time
job training 5%
my boss 10% other
my co- 10%
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25%
20%
15%
very inflexible
neither
5%
somewhat flexible
very flexible
0%
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30%
25%
20%
strongly disagree
strongly agree
5%
0%
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35%
30%
25%
20%
0% somewhat satisfied
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1. 20-40% 2. 40-60%
3. 60-80% 4. 80-100%
30%
25%
20%
20-40%
15%
40-60%
60-80%
10%
80-100%
5%
0%
20-40% 20%
40-60% 25%
60-80% 30%
80-100% 25%
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1. Yes 2. No
70%
60%
50%
40% yes
30% no
20%
10%
0%
yes 65%
no 35%
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35%
30%
25%
low
20%
very low
15%
high
10%
very high
5%
0%
low 35%
high 25%
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1. Yes 2. No
60%
50%
40%
yes
30%
no
20%
10%
0%
yes 40%
no 60%
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In this chapter the results of the statistical analysis will be presented. The
statistical analysis has been done by SPSS software and for the modeling part, has been
done by LISREL software. Then some suggestions will be given according to the results.
4.2.1 Quality
After the questionnaires were given to the respondents and I got the filled
ones back, by analyzing them in SPSS software I noticed that there could be two
categories for quality. Then by having the correlation between the questions it seemed
that it could be divided in to two separate groups. By focusing on the common attributes
of each group it became clear that we could break up the service quality in the banking
industry into two parts and name them: tangible quality(in which the perceived quality
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can be seen) and intangible quality(in which the perceived quality can’t be seen).
The Cronbach’s alpha, which was gained from these questions after running
the questionnaires, were 0.92 which was a very high one. This means that the questions
were reliable and also valid. But by having a deeper look at them and considering the
situation in Pakistani environment, and also having the factor analysis, these questions
could be separated into two groups. Questions 1 to 9 are in tangible group and the
others are in intangible group. Again after separation, Cronbach’s alpha was tested.
This time the result of the first category was 0.84 and the result of the second was 0.90.
They show that the division is done correctly.
4.2.2 Satisfaction
Satisfaction in banking industry means that the product or service which is offered
to the employees makes him/her satisfied and meets his/her expectations. This means that
the employees feel good to have the service from that bank another time. In the
competitive environment which the competitors are trying to have the other’s
employees, this antecedent can be vital. By this, the company can gain more profit. The
direct monetary profit and the indirect one which can be for example advertising by
word-of-mouth process or etc can be the means of profit gaining.
This factor in this research is measured by four questions that are brought in table
7, and the test for reliability of these questions was done. The result of Cronbach’s alpha
is 0.78 which is a good one and shows that the questions were chosen properly and they
are reliable.
The factor analysis for this part was done and the result shows that these
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4 questions are correlated for banking industry in Pakistan. It means that all of these
questions are trying to show one thing, which is satisfaction in the banking industry. The
table below shows the mean and the variance of the questions which are answered
by the employees. It seems that most of the employees answer higher than average. The
respondents felt particularly strong about the 3rd question because it has the highest mean
in the survey and less highly rated question is the second one, with the average mean of
2.98. In the table the average of the mean and variances are shown.
This factor in this research is measured by three questions, which are mentioned in the
table.
1. To change to another bank involves investing time in searching for information
about other banks
2. To change to another bank involves much effort in deciding which other bank to
use
3. To change to another bank involves a risk in choosing another bank which might
turn out not to satisfy me
These questions were analyzed by SPSS software and Cronbach's alpha 0.71 was
gained, which is a completely reliable result. Then again factor analysis was done for
these questions and the result shows that the questions are trying to identify the
switching cost factor. As the following table is showing, the mean and std. Deviation
are showing that the questions were understandable for the employees, and all of the
respondents had approximately a common understanding.
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University of the Punjab
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4.2.4 Choosing
This factor is trying to find the importance of employees choosing power. When a
employees decides to choose a company for getting some sort of services, for
example a bank to have the financial services, if the selection of that target
company is done by considering some factors, then being loyal to that company in the
future is more possible and probable. At the beginning, four questions were designed to
estimate the factor, but by having the factor analysis for the results of the pilot test, the
forth question was eliminated. After elimination the analysis was done again and the
gained Cronbach’s alpha for this factor for the remained 3 questions is 0.71. Also factor
analysis has been done for the questions and the result shows that they are trying to
represent one factor.
The result of mean and Std. Deviation of the questions are as below.
As it is shown in the results of the table 14, the highest mean and the lowest std.
Deviation are for the first question, and this shows it is important for a employees
to consider the advantages of the service provider. And also the average of the means and
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the variance of the questions of the choosing factor are as below. All of the
components of both tables prove that these questions are completely understandable
and bring a common idea to the respondents.
4.2.5 Habit
After doing the analysis on the result of the pilot test, the questions were reduced
from 8 to 6 main ones, and the other two questions were not representing the habit factor.
In this part the Cronbach’s alpha which was gained from the respondents’ answers is 0.73
and it shows the reliability of the questions. Also by having the factor analysis on the
answers, the results prove that the questions are attempting to find this factor. The table
shows the results of mean and Std. Deviation of the questions which are related to the
concept of habit. Also the average of the mean and variance in the next table proves that
the questions are designed correctly and have the same meaning for the employees.
Among the above questions, the third question has the highest meaningful result and
the first one has the lowest score. Also the sixth question has the lowest std. deviation and
the second has the highest. Also as a result, the distance between the branch and the
office or home is the most important for the employees, so it can be an important
point to be considered by the managers.
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4.2.6 Loyalty
All of the factors which are mentioned above are designed to identify the
employee’s loyalty in banking industry in order to create a model in the Pakistani
industry. To do so, in addition to the elements which were designed and discussed
above, some questions are trying to show the loyalty factor directly. Table is showing
them.
1. I would always recommend my bank to the others.
2. It would be difficult to change my beliefs about this bank.
3. I would always use this bank’s services.
4. I am a loyal employees to this bank.
5. I do not like to change to another bank because this bank sees my needs.
6. Even if close friends recommended another bank, my preference for this bank
would not change.
7. My intention to use the services of this bank would not be changed.
The results show that highest mean value for the loyalty questions is for the first
one; this can help the managers to understand that a loyal person would
automatically advertise the services, and it could be an indirect profit program for the
banks. Also the results show that the questions have the same meaning for the
respondents.
After defining the questions and the factors in the software, the relationships
between them have been extracted out and explained as below: The analysis shows that
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satisfaction has a link with loyalty. This link is very strong, and it shows that if the bank
managers want to make the employees loyal, they should have some special strategies
to satisfy the employees. When a employees is satisfied with the received services or
the products of a bank, he/she doesn’t want to take the risk of changing or moving
to other competitors.
For this reason, managers should always consider the needs of the employees. It
can be the current needs or the ones which could be desired in the future. This means that
the managers should have a team which can estimate the future requirements by
having the fast movement in the world and technology, specially in the developing
countries like Pakistan, this movement could be a little faster, so the research team of the
banks should consider the environment and by having the focus on the culture
requirements estimate the future needs of the employees. Also the managers should
consider the competitive environment, and should think out of the box to offer the best
and to satisfy the employees.
The next link which is going to be explained is habit. Habit also has a relationship
with loyalty. The t-value of the analysis for this relationship is more than 2, and this
shows that this relation ship exists. When a employees stays with a bank to have
some sort of services, it can have two reasons. First this employees is really
satisfied with the current services and the next reason could be the habitual behavior.
It means that some sort of reasons is related to the factor Habit. Some of the
most important habitual reasons are measured in this research like the family
influence, or the distance which can make a employees find the habit of using a
special bank services. In finding the loyal employees, this category also can be
considered. But it is not as serious as the satisfied employees. Because if the cause of
the habitual behavior, like the distance or other reasons, change the employees
would stop the habit.
The employees managers should find this category and to minimize the risk of
defecting of these employees, they can find a way to change this group of employees
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to satisfied ones. By doing this, the number of loyal employees is not changed at the
moment but the number of satisfied ones and also the number of future loyal employees
is changed. The next link which is valid, and its t-value is greater than 2 is the link
between switching cost and loyalty. By analyzing the answers of the three questions of
this part, the relationship between the loyalty of the employees and the switching cost can
be explained as below:
When a employees is not sure about the new bank which might be chosen, it
makes him/her not move simply and suddenly. He or she thinks that should spend more
time in order to be able to make a good decision. This process makes the employees stay
more with the current bank, because he/she considers the risk of not being satisfied with
the new bank and tries to think more about switching. By doing so, staying with the bank
for a longer time is more possible than choosing a new one carelessly.
The next factor that has a valid relationship with loyalty is choosing. In this factor
when a employees tries to find a new bank for having financial transactions, he or she
tries to compare the different banks with each other. And at last the best one will
be found (almost it is in his/her point of view), so because of the effort that the
employees puts for selecting the bank, he/she would be more satisfied with the services
of the new bank. In long time, this can make a long-term relationship, and the employees
who tries to compare the banks and select the proper one would be more satisfied and
loyal. By this explanation, the link between choosing and satisfaction becomes clear. So
the managers of the banks can give this permission to the banking industry’s
employees to have some sort of clear information about the services and also about
the bank itself.
Choosing can have a big role in making a new employees a loyal one. The next
factors which are going to be discussed are the quality factors. As I mentioned in the
previous parts, in the main model, the researchers analyze the quality as one factor. But
by having a deeper look at this element, I found that it could be separated into two
factors, and I decided to measure them separately and find each one’s relation with
loyalty. The first category is about tangible qualities. This means the feasible
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perceived quality in the branches or wherever the employees has the services, fore
example, the beauty or the neatness of the materials, has influence on the loyalty of the
employees. It is important for the employees to have the financial services in a tidy way.
Also the other element that affects this factor is the advertisements and the interest
for the employees’ investments. Intangible factor is about the infeasible quality .It also
can be named as behavioral quality, like the respectfulness of the bank’s staffs. This
factor has also an important relationship with the loyalty of the employees. Both of
these factors got the valid t-value in the analysis, but in comparison the tangible quality
has a greater coefficient with loyalty. This shows that the viable perceived quality has a
greater role in making a employees loyal or defector.
The bank managers should focus their strategies on offering the financial services
with considering these two factors. The mentioned elements can make the current
employees a loyal one. Also these two factors have influence on the satisfaction of the
employees. It means that by providing a better service, banks can make their employees
more satisfied. At the next step, they can make them loyal. As the analysis shows, these
two factors have influence on loyalty and satisfaction. Quality factors have also
influence on switching cost. It means that when a employees receives a good quality
(tangible or intangible),his/her expectations of the banking services increase, so at the
switching time, he wants to get more in the other new banks, and this makes the
movement not simple.
Quality factors have relationship with choosing. When a bank is offering the
financial services in a qualified way, and the employees perceived quality (tangible
or intangible) is high, at choosing time, he/she wants to compare the new bank’s services
with perceived one. This can also influence the new employees’ choosing decisions.
This is because of the effectiveness of word of mouth; new employees will come toward
to have their financial services in the mentioned bank. Also managers can advertise
on the employees perceived quality by having some researches on it and representing the
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results to the public. Also quality factors have relationship with habit. This is because
when a employees gets a good service quality, this remains in his mind and when needed
he is likely to go the same place again.
Habib Bank Limited (HBL) is considered first commercial bank of Pakistan. HBL
has grown its branch network and become the largest private sector bank with over 1450
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branches across the country and a customer base exceeding five million relationships.
Study was conducted to know the impact of customer relation officer activities on
the performance of bank and for this purpose Habib Bank Limited was selected. HBL is
very conscious about its employees and very much importance is given by bank to their
valuable satisfaction. Bank also follows employee's crisis management because role of
employee's crisis management in banking sector is most important and it enhances the
business and performance of the bank.
1. Better job opportunities in outer market & pay are the main reasons for increasing
attrition rate.
2. The employees do not feel valued by their employer.
3. The working environment in the company also make them to leave their job.
4. Performance Appraisals are not given at regular intervals so that the Employee
feel motivated for its work.
5. The work schedule is very much inflexible & Stressful
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5.3 Recommendations
1) Recognize that your emotions are legitimate and that time passing is necessary
for the intensity of your current emotional response to die down. In organizations
where managers recognize and acknowledge this emotional component in a
downsizing, employees return to productivity much sooner.
2) Recognize that you may need to experience each of the stages of loss described
in Kubler-Ross’s groundbreaking studies about grief.
3) Seek access to your supervisor; assuming your supervisor is readily available
and perceived by you as concerned about employees, and honest, reliable and
competent, your time with your supervisor should help you feel reassured.
4) Attempt to recreate the daily patterns you experienced prior to the layoffs.
While much time in an office is invested by employees in talking about the
situation after layoffs, the sooner you can recreate your prior patterns, the better
for your mental health.
5) Treat yourself with kindness. Now is the time to eat a portion of your favorite
comfort food. Got chocolate? Share with coworkers. Bring in a casserole or
cookies that coworkers can share. Small gestures mean a lot in the post layoffs
workplace.
6) Talk out your feelings with coworkers who are likely experiencing loss just as
you are. You can comfort one another. Your significant others outside of your
workplace make good sounding boards, too.
7) Pay attention to the needs of the coworkers who were laid off. These are your
friends and they are experiencing serious issues with self-worth and loss, too. So
many people tie up so much of their identity and self esteem in what they do for a
living that a layoff is a major blow to their sense of themselves, their competence
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and self worth. You do them a kindness, and you will feel better, too, if you
continue your weekly lunch date with your laid off coworker. Let your laid off
former coworker vent and listen to see how you can lend support. Sometimes,
active listening is all they need.
8) You will feel as if you have a proactive mission and purpose when you connect
your laid off coworkers to your connections on Facebook, LinkedIn, and the
other online social networks. Anything you can do to help them expand their
networks and effectively job search will be valued by your friends.
9) Communication is critical following a layoff. But, remember that the middle
managers who would generally communicate are also experiencing loss and
concern about their own jobs. (Often managers are the first to be laid off.) If you
are not receiving the communication you need from your manager, seek it out by
asking questions and spending time with him or her. Go after what you need;
don’t wait for communication to flow downwards.
10) Hopefully, your organization has recognized the importance of valuing the
remaining employees. But, if the opportunities for reward, recognition and
valuing seem slim, volunteer to head up an employee morale committee. The
committee can do much to bring fun and motivation back into the workplace
following layoffs. Think ice cream socials, popcorn machines, and potluck
lunches; the activities don’t need to be expensive.
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COMMENTS
Signatures
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