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Bba v case study for final exam

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  • 1. Instruction for final exam: 1. All students will bring their own copies of case study during exam. 2. Write your name and registration no. at the top of your copy. 3. No text should be written on your copy except the name and reg. no. If any text found on the student’s copy, then paper will be cancelled immediately. HRM at Affluent Advertising (Pvt.) LtdFollowing case has been extracted from the original case study written by Faiza Muhammad under the supervision of Assistant Professor FarzadRafi Khan to serve as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.Names of individuals and locations have been disguised on the request of Affluent Advertising (Pvt.) Ltd to maintain confidentiality. COMPANY BACKGROUNDEstablished in 1981, Affluent came into existence as a much needed entity for meeting the growingdemand of the country’s business circle for print and electronic mediaadvertising. In addition, it alsoserved as an entrepreneurial milestone in the career of Iftikhar Arshad, a renowned journalist of thecountry. Affluent was initially based in Karachi but with the passage of time, offices were opened in Lahore,Peshawar, Quetta and the capital city of Islamabad. Each of these branches was not only registeredindependently but also run autonomously by a different family member. Thus, all financial matters ofeach branch were independently handled and individual annual reports were published. Clients weredivided on the basis of location, that is, a company based in Lahore was served by the correspondingbranch, and so forth. If the clients were geographically dispersed, the location of its headquarterdetermined the serving branch. The profit generated by each branch belonged to the family memberheading that branch. Structurally, each branch was designed identically, that is, around functional areas such as clientservices, creative and copywriting services, graphic designing and printing, media buying, eventmanagement services, business development, ac-counts and administration (see Exhibit 1). The foundingculture of the organizationwas rigid and encouraged centralization, efficiency, high productivity andindividualresponsibility. All company policies were strictly written in black and white and a manualcontaining standard operating procedures was given to each new employee. Affluent usually hired fresh graduates with 10–15 years of education, who willingly offered theirservices at much lower wages than the industry norms. These employees learned through trial and error,and eventually replaced the more experienced lot, thus rendering a high retention rate. Those who did notshow any improvement weretested in other departments and only rarely terminated. With these design attributes, Affluent enjoyed the fastest growth rate for about a decade. Its clientelebecame the second biggest in the industry. It also gained a mono-poly in the government sector, withnames of almost all the ministries on its list of permanent clients (see Exhibit 2). In addition, the lowadvertising budgets of most local firms also contributed in enhancing the market share of its modestlypriced services. As a result of Affluent’s success in Pakistan’s advertisement industry, as well as thefamilial ties of all the branch heads with the founding member, all subsequentbranches of the companyinherited the same basic design elements. In 2000, Iftikhar Arshad transferred the leadership of his personally managedKarachi branch to his son,Intisar Arshad, who had just completed his postgraduate studies in the West. Intisar had recently earnedhis second masters degree in business.The Karachi branch thrived under its new leadership with revenuesreaching theirrecord highest in 2002. Its number of employees almost doubled from 100 to 197 within thespan of these two years. Soon after, however, the downfall began and the lowest revenues in Affluent’shistory were reached within a span of three years. This was largely due to more intense competitive Page - 1
  • 2. pressure from new entrants (that is, international advertising agencies) who were aggressively expandingtheir operations in Pakistan by luring talent away from Pakistani advertising agencies with offers of morerewarding and professional work environments. AFFLUENT KARACHI: RESPONSES TO ENVIRONMENTAL CONTINGENCIESTo operate more effectively against the new players, Intisar decided to bring aboutthree major changeswithin his branch design. First, to effectively cater for market share loss, he established a productiondepartment and held it responsible for audio and video recordings of electronic advertisements. Second,Intisar set in place a Webdesigning department to take care of both, demands for Web advertisements andcomplete website designing. Together, these changes were to cater to and build on the electronic mediamarket. Finally, the in-house failure to alleviate turnover andemployee satisfaction concerns led Intisar tohire human resource management professionals along with a Senior Director, Zaheer Ahmad, to head theHuman Resource Management (HRM) department. Zaheer had twelve years of experience in the field,and was credited for introducing some cutting-edge HR systems in his earlier workexperiences. However,neither he nor his assistant mangers had any prior experience in the advertising industry. HRM SYSTEM DEVELOPMENT AT AFFLUENTImmediately after joining Affluent, Zaheer along with his two assistant managers, spent a great amount oftime in studying the prevalent organizational systems and trying to understand the internal causes ofemployee dissatisfaction and turnover. Several issues discovered by them are included in the following.Departmental IntoleranceAffluent Karachi was faced with an implicit tussle and intolerance between three of its principal or linedepartments, that is, client services (CS), creative and graphicdesigning. Following are some comments by several members of these departments: The CS people bring incomplete and sometimes misleading information regarding customer demands. Not surprisingly, then, the advertisement copy that the team prepares tends to come back for revisions and then the department is blamed for delay in delivery and cost increase. (Creative Department Head) We are hardly ever told about the preferred shapes, colors or expected theme of print ads required by the customers. This is of course the duty of the CS department. But they aren’t the only culprits. The creative people also revise their copies twice or thrice. Obviously then our designs need corresponding changes and new ads require reprinting and re-pasting. But it is not our fault that the costs are rising up. Why should we then take the blame for somebody else? (Senior IT Manager, Graphic Design Department) Customers are never sure initially about what exactly they require. Asking a lot of questions offends them, sometimes to an extent where they directly tell us that it’s our job to decide and come up with appropriate ideas. Another problem is that we aren’t assigned customers on permanent basis and our previous knowledge regarding client preferences ends up lost or forgotten. (Client Services Manager) On the basis of these interviews, the newly established department forwarded a proposal of structuralchange within the organization. According to the proposed structure, each member of the CS, creative and Page - 2
  • 3. graphic designing department was assigned the long-term responsibility of dealing with a particular client.Thus, within eachdepartment there was a member responsible for meeting the requirements of, say, theMinistry of Health. This structural arrangement implicitly tied members of the three departments intovarious teams. Each team was to include two membersfrom the creative department and one from theother two. Furthermore, one member of the creative department was also going to accompany the CSexecutive in the initialstages of the new campaigns.Absence of Job Descriptions and Training OpportunitiesInterviews with several employees throughout the branch exhibited an overall dis-satisfaction with theabsence of job descriptions. According to a junior CS executive: I hardly know what my job is. When I joined I was given a thick manual of SOPs. It had everything except my job outline. This void grants managers and executivesto use us at their convenience. Sometimes I have even been asked to pick up lunch from a restaurant. To overcome this issue, the HR department, under the leadership of Zaheer, set out to prepare specificjob descriptions and thus, eradicate any confusion about what one was required to do. These jobdescriptions were designed idiosyncratically for eachhierarchical level of each department afterconducting interviews and an organization-wide survey. Multiple people were interviewed for each jobdescription. On the basis of these job descriptions, several in-house training sessions were also designed to developsoft skills, for example, team building, time management, conflict management and resolution and stressmanagement. Some externally offered courses on core organizational issues such as CS orientation,effective presentation making and computer programming were also recommended. Each department wasrequired to attend quarterly arranged in-house sessions. Additionally, members of any onedepartmentwere to be selected, according to their turn, for external trainings every month.Compensation-based ConcernsAt Affluent Advertising, salary distribution was generally unpredictably delayed for 10–20 days. Thiswas a major source of dissatisfaction and complaints, especially forthose individuals who were low inhierarchy and whose salary amount did not grant them the leverage to extend expenditure. Particularconcerns for these employees were frequent embarrassments related to the payment of house rent andchildren’s school fee, which even made them willing to switch jobs for the same salary level, only if theycould be paid on time. At the middle level of employee hierarchy, there also existed a dominant feeling of internal andexternal compensation inequity. The star performers believed theirefforts were not being rewarded andthat they were consistently being paid less than the average performers on account of joining theorganization later than them. WhenIntisar was approached by Zaheer, in this regard, his response was thefollowing: That’s not the real issue. Actually our competitors approach these inexperienced lads and offer jobs at exactly twice their present salaries. Naturally, they leave. But why should we disappoint our loyal and committed workers for this lot of uncommitted opportunists? We should not. To resolve this dilemma, the HR department designed appraisal systems that built on correspondingjob descriptions. These appraisals included a mix of traits, goals and competencies required for each jobcadre. The exact percentage mix varied a little based on the exact nature of job. For example, businessdevelopment and mediabuying departments had a greater percentage allocated to goal achievement than Page - 3
  • 4. the administrative or accounts departments, where a greater percentage was allocated to competencies.The average percentage allocated to each section was 15 per cent for traits, 35 per cent for goals and 50per cent for competencies. Appraisals were to be held on a quarterly basis by the department heads, after which employees weresent a copy of their evaluations. This was followed by self-evaluations and counter arguments. Finally,each employee was to meet with the departmenthead, in person, and have a personalized discussionregarding performance gaps and improvements. Goals for the next quarter were also mutually decidedduring this meeting. The appraisals for the top management team and department heads were to be carriedout by Intisar, while HR managers also collected informal or anonymousfeedback through their respectivesubordinates. On the basis of individual rankings, a merit-based bonus plan was designed, which was to replace theexisting annual increment system. According to the plan, thosereaching a mark of excellence, in thequarterly appraisal, were to be eligible for a bonus amount equal to 80 per cent of their monthly salaries.The amount for those making it to goodandabove averagecategories of performance was 50 per cent and25 per cent of monthly salaries, respectively. Finally, in light of the newly carved job descriptions and compensation plan, a credential-basedrigorous selection criterion was also devised to replace the earlier patronage-based selection and informalrecruitment through internal sources. The candidates were first interviewed on telephone to checkpresence of mind and sharpness.This was a sort of quick elimination round. Those who passed werecalled for a written test in which they were given short cases based on an advertising agency. Here,thecandidates were to narrate what they would do if they were in the shoes of the case character. Towardsthe end of the test, candidates for the core departments were also asked to design a campaign comprisinga logo, slogan and radio or print advertisements for given client requirements. Those who passed the testwere asked to prepare a 10-minute presentation, within 24 hours, on the campaign they had designed.Theselected candidates were finally called in to discuss their salary package and how they could earnabove industry standards on the basis of their performance. After finalizing these structural changes, a report was sent to the CEO for approval.It took the HRdepartment about ten months to prepare the first draft of the proposedreport. GRIEVANCE-VOICING MECHANISMA lack of grievance mechanism was a largely held gripe in Affluent. Employees expressed a need to voicetheir opinions anonymously. When asked for the reason behind this anonymous grievance registration, afemale graphic designer replied: Several of my colleagues made the mistake of publically raising their concerns, in the past. They were all terminated within a span of two months on trivial grounds; one simply because she was often seen with a male colleague at the lunch table. The guy is still here because he hadn’t voiced any public grievance. To overcome this issue, the HR department arranged several complaint boxes. One was hung in thelunch room and others at the entrance of each floor.Alteration in Administrative PoliciesThe newly established HR department extended its list of policy recommendations to include policystatements for frequent absenteeism and leave, late arrival, deliberate prolonging of clients’ visiting time,demand of unreasonably high fuel charges for client visits, unacceptably high mobile usage in the nameof CS, recurrent loan applications, etc. These policy statements are illustrated in Exhibit 3. The suggested leave, absenteeism and late arrival policy did not accommodate any absences without Page - 4
  • 5. salary deduction. However, it did allow two paid leaves, at maximum, per month. The leave applicationearned consideration only if it was submittedtwenty-four hours in advance. All unavailed leaves could beencashed at the end ofthe year. Finally, any late arrival after 9:15 a.m. was counted as absenteeism. According to the transport and fuel policy, CS executives were allocated a weekly fuel expenditure ofRs 700. This was regardless of the number of visits made to different clients or the nature of relationshipsshared with them. The executives were to maintain a record and minutes of their client visits and justifythe time expended if so desired by the administrative department. Akin to the transportation disbursements, a fixed chargeable amount of Rs 500 per month wasauthorized for the CS executives on account of mobile usage. For employees of all other departments, thefigure was reduced to Rs 200. Any bill amount exceeding this limit was deductible from the salary of theconcerned employee. Further, a loan policy was introduced which prohibited any loan grant above 200 per cent of the salaryamount. The loan had to be returned, through salary deductions, within a maximum period of 4–6 months.Lastly, a second loan could not be applied for before the previous one was cleared. In addition to the above mentioned recommendations, HR department also drafted a policy statementfor overtime, which recommended monthly payments for all hoursspent on the job after 6:00 p.m., ifapproved by the employee’s department head. Finally, a printing policy was also forwarded that restrictedthe printing facility tothe graphic design, creative, HR and accounts departments only. While the lattertwowere granted unlimited access, the creative copywriters were allowed only four text pages of blackand white prints per copy. Similarly, the graphic designers had to suffice with two black and white imageprintouts during intermediary stages of advertisement development. A third one was tolerable, but worthhigh discouragement from supervisors. Color printouts were allowed for final versions of printadvertisements only. RESPONSE TO HR DEPARTMENT’S INITIATIVESChief Executive’s ResponseIntisar asked each department head to ensure a common job description for all hierarchical levels of agiven department. Additionally, he alsorecommended a uniform appraisal form for the entire organization(see Exhibit 4). This form was to be filled by the assistant HR managers, instead of the departmentheads.The employees were to be kept in the dark about their evaluations. Only the bonuses andpromotions, distributed by Intisar, were to be announced, if any. A lunch or teaceremony of two hoursand thirty minutes was to be arranged for this purpose, by the administrative department, in a speciallybooked banquet hall of good reputation. When such arrangements were not possible, catering servicescould be employed inthe executive meeting hall. In either case, choice of hotel or caterers was subject tovoting between the options presented by the administrative department. Attendance was a must for allwhite-collar employees, though exceptions could be granted to the top management team. Blue-collaremployees were excluded from the event. The selection mechanism was also altered. At the present time, most of the new-comers came throughacquaintance with Intisar’s family. They were neither interviewed nor tested, rather called only for ameeting with the HR managers. This meeting wasmore often ceremonial, in which their salary wasdecided and introduction to their department head made. Further, the recommendation for externaltraining sessions was rejected, on account of lack of budget. In-house training was approved, which theHR managers were to design without any raise in base salary or bonus earning. Finally, it was left to thedepartment heads to shape the on-the-job training track of their employees, observe their progress andassign clients and goals accordingly. In terms of the administrative policies, the overtime recommendation was overruledstraight away,while the transportation, printout, leave, absenteeism and late arrival policies were assumed without anydelay. The loan policy was accepted but with an added condition of signing a legal document before Page - 5
  • 6. approval of the loan, stating the date of return (see Exhibit 5). The mobile usage policy was altered frommonetary to free-minute allocation (see Exhibit 6). These newly decided policies were communicated tothe administrative department for implementation. Intisar and his top management team, that is, the department heads (other than the HR director), alsokept the leverage to terminate any of the employees at any time. Thedecision, however, was to becommunicated by the HR managers, who had to frame itin the previous performance appraisal held bythem. Often the HR managers were alsodirected to ask the employee to submit his resignation rather thandirectly terminating him. The remaining dues of the leaving employees were not immediately cleared anda couple of months could pass before final clearance from Affluent. This ensured that they could not blowwhistles or exhibit explicit resistance against the decision. Lastly, Intisar announced several one-day outdoor trips and dinner ceremonies such as Iftar, EidMillan, etc., to control employee turnover and dissatisfaction. Exhibit 1 Original Structural Configuration at Affluent Advertising (Pvt.) LtdSource: Company documents. Exhibit 2 List of Major Clients of Affluent Advertising (Pvt.) Ltd Pakistan Tourism Development National Database and Registration Corporation Authority (NADRA) Malir Development Authority Ministry of Information & Media Development Central Board of Revenue Pakistan Post Office (Airex, UMS, LPS, Datapost and Other Services) National Highway Authority National Highways and Motorway Police Lahore Development Authority Ministry of Health Central Directorate of National Saving Askari Leasing University of Punjab Bahria Town Capital Development Authority National Reconstruction Bureau Board of Investment Gwadar Golden Palms Eden Developers Pakistan Ordinance Factories Haleeb Ltd Election Commission of Pakistan D.G. Cement Pakistan Telecommunication Company Limited Page - 6
  • 7. Comsats Institute of Information First Women Bank Ltd Technology (CIIT) Securities and Exchange Commission of Pakistan State Oil (PSO) Pakistan (SECP) The Bank of Punjab Shezan International Ltd Oil and Gas Development Company Mecca Cola Beverages Pvt. Ltd Limited (OGDCL) State Life Insurance National Engineering Services Pakistan (Pvt.) Limited (NESPAK) Export Promotion Bureau Privatization Commission ZaraiTaraqiati Bank (ZTB) Ltd Pakistan International Airlines (PIA) Muslim Commercial Bank (MCB) Ltd Water and Power Development Authority (WAPDA)Source: Company documents. Exhibit 3 Suggested Policy Statement for Loan Grant, Absenteeism and Mobile UsageTo: Chief Executive OfficerSubject: Suggested New Loan PolicyDear Mr Intisar,Based on our earlier exchange of ideas, I hereby propose that the following conditions be included inthe new loan policy beingintroduced at Affluent: The loan amount requested must be in accordance to the salary structure of the employee and recoverable within 6 months, through deduction from salaries. No loan amount greater than the sum of two months’ salary will be approved. The employees have to present documented evidences of the genuineness of their request. A second loan cannot be applied for if any previous loan is unsettled. No more than two loans can be applied for, per year. The loan amount does NOT ensure job security. If an employee resigns/quits or gets terminated after taking a loan, the remaining sum will have to be returned within a period of one month, failing which he will be subjugated to legal action.In addition, our department also suggests the following stances to appropriately manage the soaring rate of absenteeism and leaveat Affluent: No absenteeism should be allowed without salary deduction. A 45-minute delay, beyond official arrival time of 8:30 a.m. should be counted as an absenteeism deserving of salary deduction. No more than two leaves should be granted, per employee, per month. Any unavailed leave should be compensated monetarily equal to one day’s salary, at year’s end. The leave application must be submitted 24 hrs beforehand, for being eligible of grant.Finally, it is also suggested that a fixed sum of money be allotted to individuals, on account of mobile usage based ondepartmental needs. Thus, a sum of Rs 500 seems sufficient for the CS department, while Rs 200 should suffice for members ofall other departments.Zaheer Ahmad, Director HRMSource: Company documents. Page - 7
  • 8. Exhibit 4 Individual Evaluation FormPart A: Personality Traits (15%)InstructionsPlease use the below mentioned rating scale to evaluate the individual’s behavioral traits. All traits are from organizationalperspective, especially trustworthiness.Rating Scale 0 Poor 1 Bare minimum level 2 Above average 3 Good 4 ExcellentPerformance Competencies Weightage (W %) Rating (R) Net Result (W%∗R)1. Professional Integrity and Honesty 22. Commitment and Loyalty 53. Resourceful/Helpful/Cooperative 34. Charisma/Personal Aura/Source of 3 Inspiration and Motivation5. Neatness/Hygiene/Workplace Condition 2Part B: Goal Attainment Evaluation Form (35%)InstructionsRate the evaluatee’s performance based on the actual achievement of goals assigned. Multiply this rating with the weightageand calculate the weighted score for each goal.Rating Scale 0 Poor 1 Bare minimum level 2 Above average 3 Good 4 Excellent Actual WeightedKey Goals Weightage % Target Achievement Rating Rating Applicable for CSD Increase revenue from existing 15 customers Decrease cost of service 5 Number of visits to clients· 5 (Exhibit 4 continued) Page - 8
  • 9. (Exhibit 4 continued) Actual WeightedKey Goals Weightage % Target Achievement Rating Rating Recovery targets for accounts 10 receivable Applicable for Creative Increase revenue from existing 15 customers Decrease cost of service 5 Numbers of ads approved 10 Applicable for Media Decrease cost of service 20 Number of jobs handled 10 Credit period from creditors 5 Applicable for Admin & Finance Decrease cost of service 15 Time taken to generate reports 10 Time taken to update records for 10 accuracyPart C: Performance Behaviors (50%)Performance Competencies Weightage (W%) Rating Net Results (W%*R)1- Communication and Presentation Skills Oral and written comprehension Language structuring and vocabulary Convincing power to sell an idea through articulate, sell and defend concepts ‘You Attitude’ Adapting presentation style according to 15% requirements Level of being respectful/considerate/ mannerly/enduring Restrains emotional impulses Responds calmly Listening actively and responding sensibly Effective use of empathy Effectively planning, prioritizing and sequencing events to meet deadlines (Exhibit 4 continued) Page - 9
  • 10. (Exhibit 4 continued)Performance Competencies Weightage (W%) Rating Net Results (W%*R)2- Relationship Building and Networking Client insight and intuition; the ability to 15% intuit/anticipate the clients needs, read between the lines and design/create value added solutions and relationships Research-based knowledge of own and client business Clearly narrating requirements to (internal/ external) individuals Keeping status checks and maintaining coordination till projects assigned are completed3- Personal and Corporate Effectiveness Professional confidence Result orientation Commitment to learning Organizational awareness 10% Knowledge of skills relevant to job Active participation in brainstorming sessions4- Punctuality/Observance of Work Hours 10% Total Rating Points (b) = ________Overall Rating 0–99 100–199 200–299 300–399 Below Average Above Average Good ExcellentRemarks_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Signature HR Manager: _________ Signature Supervisor: _________Source: Company documents. Page - 10
  • 11. Exhibit 5 New Loan PolicyTo: All Organizational MembersFrom: Chief Executive OfficerSubject: New Loan PolicyDear all!This is to inform you that a new loan policy has been devised by The Company and states as under: The loan amount requested must be in accordance to the salary structure of the employee and recoverable within 6 months through deduction from salaries. No loan amount greater than the sum of two months’ salary will be approved. The employees have to present documented evidences of the genuineness of their request. The employees must sign a contract stating the promised period of return. A second loan cannot be applied for if any previous loan is unsettled. No more than two loans can be applied for, per year. The loan amount does NOT ensure job security. If an employee resigns/quits or gets terminated after taking a loan, the remaining sum will have to be returned within a period of one month, failing which he will be subjugated to legal action.Source: Company documents. Exhibit 6 New Mobile Usage PolicyTo: All Organizational MembersFrom: Chief Executive OfficerSubject: Revised mobile usage policyDear all!This is to inform you that company has restructured the cell-phone packages and allowed and assignedcertain free minutes toeach organizational member, according to their anticipated mobile usage. According to the new policy: 1. The company will only pay for the line rent and tax charges for each employee’s mobile usage cost. 2. Within the free minutes allocated to each employee, he/she will NOT be charged additionally and NO deductions will be made from salaries. 3. If an employee exceeds his/her mobile usage limit, s(he) will be responsible for the payment of additional charges, failing to do so will result in disciplinary action.PS: MrShabbir of Accounts Department has a list of free minutes allocated to members of differentdepartments.Source: Company documents. Page - 11