This is a presentation by Seifu Bogale, former VP of HR at Commercial Bank of Ethiopia, at the 3rd Annual East Africa Finance Summit

1. 1

2. Human capital development success stories
An experience with CBE
I. Existing situations that led for the need to design a
comprehensive HR strategy
1.1 Micro level perspectives
1.2 Strategic perspectives
II. Approaches followed to design the HR strategy
III. The HR strategy formulation process
3.1 Strategic HR issues
2

3. Cont’d
3.2 HR strategy components
a) Learning and development
b) Succession planning and management
c) Performance management
d) Restructuring the HR functions
e) Establishment of training centre
IV. Accomplishments
V. Lessons and challenges
3

4. Human Capital Development Success
Stories An Experience with CBE
I. Existing situations that led for the need to design a
comprehensive HR strategy
1.1 Micro level perspectives
 2008/09 Process improvement initiative the business cases for
business process reengineering
 CBE was suffering from delivering inefficient and ineffective
banking services; there had been consistently observed facts of
4

5. Cont’d
- Customer dissatisfaction on the services of branches in
both domestic and foreign banking operations.
- Excessive delays in the processing of loan requests and
decision to make.
 The functional relationship between the head office support
organs and the operations (Branches and districts) was not
effective to run a day - to - day business.
 Within the branches customers used to appear/apply in many
contact place to complete a single and simple service request
5

6. Cont’d
 Support services to branches from the head office
organs were reactive rather than acting proactively.
 Among others, the BPR initiative focused on actions of
process improvements of the following:
1. Branches’ services to be organised at single contact
place or one window , where a customer would
appear to an officer to any kind of request/service
rather than roving around the counter.
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7. Cont’d
2. Service request regarding credit and foreign (Trade Service) to be
processed centrally in the forms of standardised service delivery time
and working parameters: This had required all types of loan requests
to be processed at the centre and likewise the trade service especially
that of the documentary based requests were brought to the centre.
1.2 Strategic Perspectives.
 The aforementioned fundamental changes have brought two emerging
issues. In fact they were inherently related to the reasons for the New
work design would become more effective.
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8. Cont’d
1. How did the existing human power capability (skill,
Knowledge and behaviour) would fit into the newly
designed work processes (CATS, Trade Service and Credit
Processes). This had been the case to apply also in support
organs like HR, Facilities, Information Technology etc. the
question was how did they need to be organised to
effectively support the branch operation so that the whole
banking operation address customer complaints effectively.
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9. Cont’d
2. Should CBE design a strategy that was focused on the process
improvement only or more beyond that? i.e. Formulate a
business strategy that deal with company wide business strategy
in which case the process improvement issue can be managed
with in short term actions.
 The answer was the action for formulation of the first five year
strategy document (2010/11 – 2014/15)
 Key strategic discussions: Establish a Grand strategy outlook at
top.
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10. Cont’d
 CBE’s vision
“To become a world class commercial bank by the year 2025”
 Mission
“We are committed to best realise stakeholders’ value
through
Enhanced financial intermediation;
Supporting national development priorities ;
Deploying highly motivated skilled and disciplined
employees as well as state of the art technology;
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11. Cont’d
We strongly believe that winning the public confidence is the
basis of our successes”.
Note:
 “Deploying highly motivated skilled and disciplined
employees as well as state of the art technology”
 That was the corner stone laid out to build a
comprehensive HR strategy. However, other strategic issues
for which the HR strategy has to consider were also
outlined.
11

12. Cont’d
1. Resource mobilization
2. Risk management
3. Information technology
4. Process efficiency and effectiveness
5. Marketing and sales management
6. Capital growth
7. Physical resources management
8. Financing and product lending
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13. Cont’d
 In terms of coining down the outcome expected from
the HR strategy the following specific results were
envisaged
1. To have knowledgeable and capable employees;
2. To have improved performance management and
succession planning system;
3. To have engaged and capable employees with the
right attitude to bring service quality.
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14. II . Approaches followed to design a comprehensive
HR strategy.
 The then Executive management team had a clear
understanding that HR should remain as strategic as the
core business functions the govern the growth of CBE. To
put it clearly a firm stand has prevailed that HRM should
remain integrated with the corporate business strategy and
supposed to be proactive to align the work force towards
the achievements of the corporate goals.
 As long as CBE aspires to be a world class commercial bank
bringing BEST practices into HR functions were taken as
mandatory.
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15. Cont’d
 Benchmarking world class banks like that of COMMERZ BANK,
HSBC, State Bank of India, CITY BANK etc. influenced the
management to quickly act, in the form of adaptation rather
than wait for the local experiences to mature.
 Key discussions as regards the roles and responsibilities at BOD
and Executive management was that the formulation of HR
strategy should be the affairs of BOD as an oversight
responsibility and that of the management was to lead and
execute.
 Then four steps have been taken to instil the project’s (strategy
formulation process) ownership at the top.
15

16. Cont’d
1. BOD has assigned dedicated members from its own to oversee the strategy
formulation and monitor the implementation progress regularly.
2. The President has established the Talent Management Committee being
the chairperson he himself. The committee, among the many technical
responsibilities, was mandated to review and decide on any strategic
decisions.
3. At technical level an HR steering committee with key stakeholders; Branch
operation, Business development, Risk management and HR itself was
established. In addition to this the committee further established a
counterpart team(professionals) to be seconded with International
consultants so that knowledge transfer would materialise as quickly as
possible.
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17. Cont’d
4.There have been a regularly conducted progress
reviews first by the BOD at least once in a month and
secondly by the executive management every two
weeks. In fact HR strategy action plan was made part
and parcel of the annual business plan where the
results are assessed with the performance scored in the
business plan.
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18. III. The HR Strategy Formulation
3.1 Strategic HR Issues
 First thing first; the BOD and Executive management sat down for a
joint consultation. The purpose was:-
a) Build a consensus that the HR issues in CBE are the make or break in
the sense that the business strategic goals wouldn’t materialise
effectively unless and otherwise capacity development efforts in
terms of the required knowledge, skill and behaviour are well placed
aligning the Vision, Mission and Value of the Bank .
b) Build a sense of urgency that there is no time for leisure where the
management spends its time in learning only but to act i.e Draw the
strategy and execute immediately.
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19. Cont’d
 Hence the strategic actions drawn for HR were:
1) Conduct knowledge and skill gap analysis and training need
assessment.
2) Development of comprehensive HRD strategy for the Bank.
3) Development of the succession planning and management
system for the bank.
4) Development of the training system for key positions of the
bank.
5) Adjustment of the management trainee program.
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20. Cont’d
6)Development of the retention strategy for the bank.
7)Development of the training materials and other tools
for the new HRD system.
8)Develop institutional strategies to better organise the
HR functions.
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21. 3.2 HR strategy Components
A. Learning and Development
 The vast task of designing the learning and
development strategy started with the skill gap
analysis and training needs assessment. It took a
number of successive steps where substantial time and
professional input of the overall project was spent.
 In order to frame the logical alignment of the skill gap
analysis and draw the need assessment, the management
has followed a strategic model as shown below.
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22. SKILL AND KNOWLEDGE GAP ANALYSIS IN CBE
Marketcustomers
Marketcustomer
BOARD OF
DIRECTORS
Top
Management
Middle level
management Professionals
Lower level
management
Service workers
Skill &
knowledge
Policy and
Governance
issues
Strategy Management operation
22

23. Then the skill and gaps were identified
a) Top management: It was understood that for the top
management to know all the technical process of bank in
detail was not important. However, a good knowledge of
strategic and operational management and be able to
interpret, to plan and to manage the development of the
bank was mandatory. Therefore, three main and urgent
training needs were identified;
- Strategic management
- Corporate governance
- Human resource management and development
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24. Cont’d
b) Middle Level Management: Although they were not
involved in the strategy planning, they share a lot of
responsibilities in strategy implementation. Hence, skill
and knowledge needed in implementing the strategy and
supporting change management process at operation
level were identified;
- Strategic management
- Risk management
- Human resource management & development
- Customer relationship management
24

25. Cont’d
c) Lower level Management: These were the members of management who are
involved in the direct contacts of customers and conducting actual branch
operation more than their seniors. The need to have the knowledge of
organizational talent and to work on service delivery efficiently and effectively
were the requirements. The management decided to focus on the following
skills .
- Human resource management and development
- Leadership
- Branch management
- Marketing and sales management
- Customer relationship management
25

26. Cont’d
- Information technology /Management information system
- Credit management
d) Professionals: These groups involve the largest and diverse stock of
the human power of the Bank. Therefore, they were treated according
the importance to their area of speciality but common skills required
for the achievement of organizational goals were also identified.
- Customer relationship management
- Credit management
- Soft skills (interpersonal & communication skills)
- Information technology /management information system
- Marketing and sales management
26

27. Cont’d
a) Training Need Assessment
 Training need assessment at organizational as well as individual
level had been conducted. By the virtue of its practical
limitation, the result was restricted to the individuals current
requirements. However, the management has decided to cover
the future needs in line with the requirements of corporate
business objectives. The five year corporate score card of 2010/11
was used for this purpose .
 A tailor made training management system that included the
steps of training need assessment, development of training
curriculum & calendar/plan and training action plan was drawn.
27

28. Cont’d
 In that way CBE has conducted successive training programmes six
years on the aforementioned training needs supported by international
and local training service providers (by FSFM, Crown agents, KPMG,
EAL,AAU and in house dedicated trainers)
b) Succession Planning and Management
 The rapid growth of CBE, by way of an aggressive branch opening and
the effects arising from the dynamic changes happening in the banking
sector, had impacted CBE to face the challenge of leadership talent
constraints down the line of Top and mid level managements. Every
year fulfilling the need for new branch managers (at least 100) was one
of the breath taking task to be addressed.
28

29. Cont’d
 Nevertheless, finding the strategic link with the factors of organization
growth, increasing voluntary turnovers, retirements, disability and
other external forces was the key driver to establish succession
planning and management as a system in the bank.
Four (4) levels of succession pools were established
- President, VPs and chiefs (39 potentials)
- Directors, District managers, Branch managers (III & IV) (294
potentials)
- Branch mangers (I & II) and customer service managers (765
potentials)
- Managers (HO) and professionals (3,150 potentials)
29

30. Cont’d
 Talent management committee chaired by the President was
made responsible for ensuring the smooth operation of the
programme. The committee, among others, was responsible for
setting and achieving SP&M objectives, developing and retaining
talents within the identified succession pools and make ready
future leaders in sustainable manner.
 Human resource management was made to be responsible for
facilitation of SP&M system by providing technical assistance
such as the tasks of developing policies and procedures,
supplying technology to support data collection and storage as
well as follow-up and monitoring the development progress.
30

31. Cont’d
 Besides the on-going works required to establish the
system immediate action were taken
-Development of leadership competencies
directory .
- Profiling and categorizing of the succession pools.
- Establishing personal development plans.
- Using the already established pools for
promotions and appointment with in the human resource
management.
31

32. c) Performance management
 The traditional performance management system ( the
subjective based) was placed by the result oriented performance
management. Initially team level performance management
system was designed and implemented following the launch of
balanced score card in 2010/11.
 Individual level PMS in its full cycle i.e. performance planning,
management, appraisal and rewards was launched with major
emphases on use of in-house capacity. It was because of the
sensitive nature associated with the system.
32

33. Cont’d
 CBE has laboured for almost three years to bring the PMS fully
owned by the management and employees, these has been
serious challenges in understanding the overall system
specifically in cascading and setting targets/ goals at team and
individual level, operationalising the performance evaluation
parameters and then conducting the appraisal actually.
 PMS in CBE was an experience of live work i.e. learning by doing
which had contributed significantly for the ground work to
shape up the current one. Currently CBE uses a system
supported by technology (Oracle PMS).
33

34. Cont’d
d) Restructuring the HR functions
 In the previous years (before 2011/12) HR was occupied with the transactional
activities where much of the roles and responsibilities fall with in the pursuit of
personnel administration. Therefore, in order to better place the HR(as
strategic function) and carry on the responsibilities of transformational
aspects , the main department was restructured as:
1) Human resource management having three divisions responsible for the
activities of :
- Recruitment and selection
- Human resource transaction: staff benefits and HRIS
- Employee relations and communication
34

35. Cont’d
2) Human resource development department with three divisions
responsible for formulation and implementation of the strategic
aspects of:
- Learning and development
- Succession planning and management
- HR business partnering; a unit opened with the responsibility
to strengthen the collaboration and communication between the
Corporate organs, Districts and Branches.
 Currently the HR function structure has been changed further to follow
the international practice. The model of Ulrich “ three – legged- stool”
which requires a more significant changes in the roles and
35

36. Cont’d
responsibilities of the existing(in terms of allowing
specialisation and standardization). Accordingly renaming
was also encountered. Hence, the new structure was set in
the following manner.
1. Human Resource Centre of Expertise (HRCOE) involving
- Talent development
- Talent management
- Employee performance management
- Leadership development
36

37. Cont’d
2. Human Resource shared service
- Talent acquisition
- Staff benefits & performance processing
- Training operation
- Pensioned staff service
3.HR Business Partnering: The strategic unit responsible
for partnering the line management across different
locations so as to enable them implement HR strategic
activities effectively.
37

38. Cont’d
 While the extensive works on policy and procedure development were
undergoing, capacity developments, for the HR professionals, in line with the
new roles were done. Moreover, as a policy, placing the HR staff seconded to an
international consultant was made mandatory so as to ensure the knowledge
transfer realised.
e) Establishment of Training Centre
 By the fact that CBE employs the largest share of work force in the banking
sector and the extensive outcome of strategic initiative i.e. the large training
needs (in number and fields), the need to establish a training centre (centre of
excellence) for CBE has become indispensible. Today CBE has a full fledged
training centre, one of an exemplary in its kind, with complementary facilities
(built with in)supporting the training programmes to ran effectively.
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39. Cont’d
IV. Accomplishment
a) Learning and development
 Unlike the previous traditional practice, CBE has established a
comprehensive training system designed for the capacity
development programmes envisaged in Bank’s short and long
term plans. The system, among others, has established basic
tools such as competency directory; the bases for skill and
knowledge gap assessment, training curriculum suited for the
already identified gaps in each levels of management and
professional positions and finally a medium term training plan.
39

40. Cont’d
 With this system CBE has undertaken an extensive training
programmes year-in-year out for the last six years or so. Because
the programmes were supposed to address the critical gaps, the
reasons for achieving the business objectives, it is reasonable to
conclude that the performance achievements recorded in key
strategic goals and targets were the clear indications.
 CBE has established Centre of Excellence – a training centre
which has served effectively the bank to achieve its medium term
training plan. In the absence of the services of this centre the
implementation of HR strategy could be far from success.
40

41. Cont’d
b) Performance Management
 Performance management as a system with its cycle i.e. the
planning, management, appraisal and reward is one of the
first accomplishment to mention here. Although much
remains to done in effectively realising the link between
the corporate, departments and branches PMS, in
complete forms, with that of the individual score cards, the
performance of the system (supported by oracle PMS) in
the cascading aspect, setting goals and targets for units as
well as individuals and again make the parameters ready
for the actual appraisal works could be sited as success.
41

42. c) Leadership development
 Again here the first achievement is the effort done to bring the system
becomes a reality. The ad-hoc level practice has been replaced with that
of the best practice focusing strategically in addressing the challenges
of leadership gap, talent loss and fulfilling future requirements arising
from business growth/change.
 As part of the mid and lower level leadership development programme,
CBE has managed the challenges related with the losses of experienced
District and Branch managers, Directors and key professionals in
Information Technology area. In fact the management has taken the
benefits of the already established succession pools as the tool for
replacements to cope up the immediate needs.
42

43. Cont’d
d) Human Resource information service
 Human resource strategy implementation without the
support of Information technology cannot be effective.
Not only the benefit it provides in the efficiency
aspect; the critical issue of the need to integrate HR
programmes mentioned above was realised by the
investment done on HRIS. Currently CBE owns Oracle
HRIS system that provides on time and effective
support to all organs and employees of the Bank.
43

44. V. Lessons/Challenges
 Strategy ownership from the top: The first key lesson to be underlined
here is that without the support and active involvement of the Board,
HR strategy implementation would have remained far from success.
Not only that, the harmonious team spirit developed at the executive
management level had contributed significantly to consciously own the
strategy from the very beginning. In fact such a lesson is quite
common in other successful organisations in HR.
 Involving the line management into the actual project management
was also the success factor as such that the ownership effect has
brought the strategy to work on the ground level. Particularly the
aspects of conducting timely monitoring and evaluations of the
implementation activities was the critical one.
44

45. Cont’d
 Investing in Human resource Information was considered as a must not a
choice. Much of the weaknesses observed in the delays of implementing
project activities were that of the reasons related to the absence of technology.
CBE has to spend solid two years in PMS on the cascading and administering
performance parameters across the bank manually. Besides getting the
interfacing elements within the HR programme was the critical challenge.
 The results expected from self assessments, the skill and knowledge gap survey,
were not in line with the desired outcome. Everybody overrated
himself/herself while the actual fact that prevailed was the bank has suffered
from incompetence in leadership and technical capabilities.
45

46. Cont’d
The challenge was resolved through a number of
consultation; at times the management has taken the
decision to adjust.
 Ownership of performance management system at line
management and employees has been realised after
two years of exercise. The tasks of awareness creation
and then cascading the system down to employees
level has taken much of the time and effort.
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47. THANK YOU
.
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