this report is made by the students of ucp in there 2nd last samaster for there final project.

2. Final project
Compensation
Submitted To
Madiha Rehman
Submitted By
Umair Shaukat L1f11bbam2004
Umer Javed L1f11bbam2460
Rana Waleed Shahbaz L1f11bbam2015
Arslan Tahir L1f11bbam
Mashood L1f10bbam

3. Acknowledgements
Start with the name of ALLAH who is the most Beneficent and Merciful. We will first of all
thank ALLAH ALMIGHTY for giving us the courage and confidence to complete our project…
Secondly, we would like to thank our teacher, our consultant mamMadiharehman who had
given us an opportunity to make this project that was based upon the pragmatic execution of
HR Compensation and benefits concepts in real scenario.
She had very comprehensively briefed us about the requirements of this project and only
because of her special guidance we are able to successfully complete this project. Thirdly, we
are also indebted to MR. FAHEEM ALAM, branch manager at NBP for his precious time and co-
operation; he gave us from his busy schedule.
Executive summary
This report, as indicated by its title, covers the compensation practices of NATIONAL BANK OF
PAKISTAN. It has many aspects. As we have described the values of the bank it was necessary
and important to shed some light on how the bank’s practices are related to the wider
organizations policies and values. The report also gives the reader a profound discernment of
the performance appraisal system of the company, from forms to the method they use and to
the number of times they get one also focusing upon the type and nature of the feedback and
appraisals. It also describes the way in which goals are set and also how they are monitoring the
tasks. The division of targets plus who is to report whom i.e. the span of control is also covered
inside this document.
Compensation policies bonuses incentives pay plans allowances and regarding these things we
try our best to cover related aspects of compensation. This report is mainly about the term-
project of Strategic Compensation, which was assigned to us by our respected MAM Madiha
Rehman.It is aimed to explore the practical implementation of basic compensation mechanisms
in real scenarios, which we have studied throughout the semester. The purpose behind this
project was to equip us with the handy knowledge of real organizations so that our analytical
and cognitive skills can be improved. For that purpose we have selected NBP.
The document contains in detail all the factors and aspects which makes up the compensation
practices of a certain organization. From pay ranges to models plus the value of commissions,
the issue of leading or lag or matching the market pay plus a glimpse of compensation from its
IT department is written down in this document.

4. In the last we suggest some recommendation after getting an insight of NBP The
recommendations, we have suggested, for the Human Resource Department of NBP in the light
of our analysis. In the end, we have included all the references about the data we have used in
the preparation of this report.
History
National Bank of Pakistan was established on November 8, 1949 through passing of a special
ordinance in the National Assembly. The need for the establishment came due to the reason
when after that time newly born country was facing economic crises. To get rid the intervention
form the reserve bank of India, a self-owned and operated Central Bank by the name of State
Bank of Pakistan was formed in July 1948 to carry on the responsibilities of issuing the currency
and most importantly controlling the flow of money inside the country. State Bank of Pakistan
after its formation demanded from the Indian Reserve bank the assets against the Indian
currency retired from Pakistan territory. Government of India refused to hand over the assets
worth about five hundred million rupees. This dispute is still unsettled and these assets are still
not delivered to Pakistan.
Introduction
National Bank Pakistan is the largest Commercial Bank of Pakistan, with over all assets of about
USD 12,051 Billion. NBP is owned and guaranteed by the Government of Pakistan and is
running in its international operation since 1949. National Bank of Pakistan enjoying B2
International Moody's rating, has more than 1,289 domestic branches in Pakistan and 22
overseas branches in USA, Germany, South Korea, Hong-Kong, France, Japan, Bangladesh,
Egypt, Bahrain, Saudi Arabia, Kyrgyz Republic, Afghanistan, Turkmenistan, Azerbaijan; a
subsidiary Bank in Kazakhstan, Representative Offices in Chicago (USA), Toronto (Canada),
China, Uzbekistan, Beijing, Tashkent etc. All foreign branches are being controlled Finance
different Regional offices, located in respective areas of the world. The Regional Office,
stationed in Almaty Kazakhstan, is controlling the operations in CIS. The Bank has several joint
ventures in various countries of the world. NBP has large network of foreign correspondents
Finance in the world.
It has taken various measures to facilitate overseas Pakistani’s to send their remittances in a
convenient and efficient manner. More recently it has started Electronic Home Remittances
Project. This project introduces technology-based system to handle inward remittances

5. efficiently, by ensuring that the Bank's branches keep a track of the remittance received from
abroad till its final receipt.
National Bank of Pakistan has built an extensive branch network with more than 1,289
branches in Pakistan and operates in major business center abroad. The Bank has
representative offices in Beijing, Tashkent, Chicago and Toronto. It has agency arrangements
with more than 3100 correspondent banks worldwide. Its subsidiaries are Taurus Securities Ltd,
NBP Exchange Company Ltd, NBP Capital Ltd, NBP Moradabad Management Company Ltd, and
CJSC Bank, Almaty, Kazakhstan. The Bank's joint ventures are, United National Bank (UK), First
Investment Bank and NAFA, an Asset Management Company (a joint venture with NIB Bank &
Fullerton Fund Management of Singapore).
HR practices

6. HRP is the process of analyzing organization's human resource needs in the light of
organization's objectives, corporate and business level strategies. It includes Developing plans,
policies, and systems to satisfy HR needs .Setting human resource objectives and deciding how
to meet them. Ensuring HR resource supply meets human resource demands. Comparing
forecasts of demand and supply. Planning the actions needed to deal with ant interfacing with
strategic planning and scanning the environment. HR department work for forecast the need
which is done by two different methods Internal Supply Forecasting Information Organizational
features (e.g., staffing capabilities)Productivity - rates of productivity, productivity changes,
Rates of promotion, demotion, transfer and turnover. External Supply Forecasting Information
External labor market factors (retirements, mobility, education, unemployment). For NBP our
dedicated staff is a key strength. NBP has been investing in developing this valuable HR through
need base training and career growth development. Our objective is to become an employer of
choice and to maintain complete industrial harmony within the institution. Our new hiring of
top class MBAs as Management Trainee Officers (MTOs) and search for talent within the bank
has helped in preparing second and third tier leadership lines which will shape our succession
planning process and at the same time will ensure that with the passage of time our employee
refinement and skill enrichment program continues. They also have started new ‘Employee
communication program’ and internal organizational magazine to improve the interaction of
top and middle level management with the lower management. Female employees are being
encouraged through female empowerment program under which they are given responsible
and challenging assignments. Currently over 60 females are employed as branch managers all
over the country and some females hold senior management positions.

7. Employee Recruitment & Selection
They do Job analysis in which job description and job specification is included. In the case of
replacement staff a critical questioning of the need to recruit at all (replacement should rarely
be an automatic process)Use external expert consultants for recruitment and selection. Equally
organization may seek help from 'head hunters', to recruit executives. Recruitment and
Selection should screen for suitability of applicants as poor selection costs a lot even for the
mundane day-to day jobs. NBP follows merit policy for recruitment and selection of employees
in the bank.
Preface

8. Compensation policy of any company is very confidential no one easily tell anyone about their
pay plans and their performance measure and strategies regarding compensation policy
conversely, if u have ha reference in company u may get the idea of the compensation policy of
that company . Here we use a reference of our friend to find out the compensation policy and
plan of national bank of Pakistan. We want illustrate their strengths and weaknesses in using of
different tactics and their comparison with others. We try to find what method they are using
for giving salary to their employees whether they are using traditional base pay systemmerit
pay or incentive pay system.
We try our best to talk with employees as we met their HR manager and try to find aspects
regarding compensation like their base salary plan their bonuses plan, allowances, and
incentives stock options or benefits after or during the job or what type of pension plans they
provide to their employees. Whether they use internal alignment compare their pay plan with
others or use some other tactics regarding compensation plans .this report contains a brief
story about compensation plan of NBP how they reward their employee and retain them.
Strengths
Oldest institution
Alternate duties in SBP absence
More deposits than other banks
Employee benefits
Broad network
Weaknesses
Lack of modern equipment
Lack of computerized system
Corruption
Uneven work distribution
Favoritism

9. Vision Statement
To be recognized as a leader and a brand synonymous with trust highest standards of service
quality, international best practices and social responsibility.
Mission Statement
“To make the Bank complete and competitive with all international Standard in performing,
quality of, operations, staff, financial strength and products and services To develop a culture of
excellence in every spare of activity of the bank”
Goals and objectives
To enhance profitability and maximizing the share of NBP through giving the leverage of
existing customers and diversified range of products
“An organizational objective is the intended goal that prescribes definite scope and suggests
direction to the panning efforts of an organization”
International Operations
NBP has the largest international franchise in terms of Assets. We are present in four continents
and have branches in all the countries that are major trading partners of Pakistan. Our unique
coverage of Central Asia, Fareast and South Asia is incomparable and we will be the major
benefactor once the trade business from the Energy rich Central Asian Republics picks up. The
bank is planning to start operations in Saudi Arabia (mid 2008) and further expand our branches
in Afghanistan and Bangladesh. The bank’s international operations strategy is focused towards
increasing trade business and expands where the bank has competitive advantage.

10. Core values
Highest standard of integrity
Industrializing teamwork and performance culture
Excellence in service
Advancement of skills for tomorrows challenge
Awareness of social and community responsibility
Value creation for all stake holders
NBP Values
People make the organization
People collectively yield results
People have ambitions and aspirations to be distinguished and rewarded
People form the human capital to be developed and invested in
Product and services
Demand Drafts
Mail Transfers
Pay Order
Letter of Credit
Commercial Finance
Foreign Remittances
Agriculture Finance
Loans

11. Compensation policy
National Bank of Pakistan is one of the largest commercial bank operating in Pakistan. It has
redefined its role and has moved from a public sector organization into a modern commercial
bank. The Bank's services are available to individuals, corporate entities and government. While
interviewing the manager we find they are using the compensation policy and have different
rewards for their employee’s different types of incentives and befits they give to employees.
While thereis not any precise performance measure through which they measure the
performance of employee they are using traditional pay systemwhich based on seniority as
employees length of service in performing their jobs increases pay of employees gradually
increases with that. On the other hand there are no proper check and balance on employees
because of weak HR system of NBP. In NBP pay increases on the bases of seniority and often on
the base of merit.
Integration with goals
Every company has a main objective to increase the profit and share of its company similarly
NBP has a goal to increase its share and profit in the market and employee play an important
role for a company. NPB employees get a wide range of pay then the other banks and also get
different types of increments and bonuses to achieve their task.
Pay for Performance
Pay for performance is rarely use in the NBP there are not proper HR system and have no
proper performance measure. As it is government bank employees not get easily promotions
and mostly promotions based on intercession. While they are using merit ratings but person
focused pay systemis not used in NBP.
Job analysis
Jobanalysis included job description and job specification in which there are different things are
included like education work experience, work activities, work assignments and many other
things in NBP job analysis done by the managers and job analysts. Jobs are classified into
different grades as grade increases job complexity increases and according to that composition
plan also vary different post of employees get different type of salaries incentives, benefits and
allowances. In NBP higher grades jobs have more complexity than the lower grades.
They classified their jobs into different categories with respect to different aspects.

12. Pay Range
The philosophy of the organization, aforesaid, is directly linked with the payment system. Mr.
saadulislam, as per him, is in agreement with the organizations policy. Also he was satisfied
with the pay he gets. Manager who’s pay is between the range of 50,000-60,000 Rs/ on the
other hand and the OG1 pay is 65,000 and OG2 pay is 55,000
Performance Appraisal
NBP has was using old ACR system for employees evaluation until 2004 then performance
appraisal systemintroduced .According to this system employees are assigned SMART job goals
at the start of the year then mid-year and final evaluation is made at the end of the year on the
basis of these set targets. Further employee evaluation is done by his immediate boss regarding
his motivation and behavior. These reports provide basis for employee appraisals, promotions
and training need assessment .Through performance appraisal companies describe whether
their employee performing well or not and different types of appraisal forms uses in different
companies. In NBP as there is not a strong HR systemand mostly traditional ways are used
there is not a concept of 360 only manager tell the employees who is best or who is not. On the
other hand we interviewed which person he claims that somehow we are using forced
distribution method and rank the employees but appraisals are mostly biased done by the
mangers.

13. The appraisal is mostly done quarterly or annually and in which different departments is involve
and they are not using 360 systems only branch manager with other persons do the appraisals
of employees.
The employees are very effectively communicated the goals and targets. The appraisal is done
on quarterly and annual basis. For example the National Sales Manager tells the Regional Sales
Managers about how much, let’s say, personal accounts and deposits are to be made. These are
delegated to the Area Sales Manager which then communicates it to the team managers who
trickle it down to the sales executive. The tasks are divided objectively keeping in mind the total
number of targets to be achieved and hence the sales executives are informed. These
performance appraisals and target achieving is linked to the promotion and job growth directly.
Of-late promotions to Italy are being made on the basis of how many targets the Area sales
Manager achieves. The ones who will achieve will be go to Italy. All the sales executives, team
mangers have to respond equally thus building team work and cementing their core values of
team work and integrity
The appraisal is mostly done quarterly or annually and in which different departments are
involve like cash, audit, operation and credit in ranking system A only give to cash department
similarly TWO D ONE B and three 3C,S are given to other departments.

14. Gain sharing plans
NBP provides gain sharing plans to employees through which they want to increase the
performance of their employees. Employees have an opportunity to earn a Gain sharing bonus
generally on a monthly or quarterly basis. Gain sharing measures are typically based on
operational measures (productivity, spending, quality, customer service) which are more
controllable by employees rather than organization-wide profits. As Gain sharing is a system of
management used by a business to increase profitability by motivating employees to improve
their performance through involvement and participation. As their performance improves,
employees share financially in the gain (improvement).
Trainings program
Special training programs are arranged by Organizational Development and Training Wing
headed by Executive Vice President Mr. Muhammad Hanif at NBP.OD&T Wing formulates
education and training programs for all levels of employees from executives to lower
management. NBP has various Staff colleges across Pakistan for this purpose. There are
different types of training sessions held in NBP which included Work shop, Dialogue Sessions,
Quiz Programs, Lectures by NBP resource persons or professionals from other institutes, on job
Training, Tours of Trainees to different offices, Seminars, on spot training by visits of resource
persons to the respective regions. Employees get different befits and incentives regarding these
training programs.
Government role
As NBP is government owned bank therefore mostly changes in NBP are done by the
government .Employee compensation and benefit rules are decided by government along with
market mechanism conversely, Good Employment Benefits in NBP ensure minimum turnover
rate
Compensation practices
At present, salary structure of NBP employees is much better than its competitors. Besides
basic pay, following allowances are also paid to employees irrespective of their grade or scale
.House Rent Allowance 50% of basic pay. Conveyance Allowance like minimum 90 liters of
petrol to clerical staff Utility Bill Allowances, Education Allowances, Medical Allowances (for
medicines), Maternity Allowances.

15. Cash Awards
Every year, best performers are awarded with cash awards ranging from Rs. 100,000/-to Rs.
500,000/- depending on the grade of the employee. Mostly managers are benefited from this
award to motivate them for procuring more business. Employees are awarded for extraordinary
counter service or adopting precautionary measures to prevent frauds.
Benefits and bonuses
NBP provides there employees several types of non-monetary and monetary benefits and other
allowances and bonuses. like they provide different types of leaves and different types of
accommodationssaadulislam give us an expel of employee to get a clear view of the picture in
which a person named Muhammad saleem his basic pay is 62,402 at the post of OG1 he got
house rent allowance 34,321 and utility allowance 12,480 and cost of medicine 12,792
education allowance is 9000 key allowance 18,000. So u can find here NBP provides too much
benefit to their employees.

16. Pay increase
Employees get annual increase in their basic pays depending on their performance, cost of
living with increase rate varying from 4% to 17% .All other employees get their annual increase
as per rate announced by the Head Office irrespective of their performance but is mostly biased
and suggested. However from the year 2009, concept of "Pay for Performance" is introduced in
NBP for all the officers and executives but it is not fully implemented. There are Loan Facilities,
Motor Cars for Branch Managers and Promotions.
Stock options scheme
The National Bank of Pakistan (NBP) will consider launching an employee stock option scheme
within the next two to three years once 40 to 50 percent of the bank's capital is listed and 5 to
10 percent can be bought back to offer shares to it's 12,000 odd employees.
"As the ownership of the government gets divested and public ownership increases, we will be
able to buy back enough shares without putting pressure on the price," Raza said. "Then we can
use these options as a motivational tool to give employees a sense of ownership. If you have
12,000 people looking at your stock price and they see it going under water, they'll say let's
work our guts out and get this up and we'll all benefit."
If NBP's scheme is formulated, it will be the first major Pakistani corporation to offer an
employee stock option program as part of its compensation. "We want to move to a merit-
based compensation systemwhere the focus is less on salary and more on bonuses and stock
options," the NBP chief said. "In the U.S. salary increases are always the lowest part of
incremental compensation."
Stock options are widely used in the West, especially in U.S. corporations as a form of employee
incentive and compensation. Under the scheme, employees are given the option to purchase
the corporation's shares usually at a discount to the market price, for a specified period of
years. And often, shares are given to employees in place of salary raises.
"It's a tried and tested concept," Raza said. "If you examine the single differentiating factor
which makes U.S. companies more successful than European and Japanese companies, it is
stock options. There is no secret in management but for a collective contribution there has to
be a financial opportunity."Raza estimates that the bank will be able to launch such a scheme
within a period of two to three years, but he said, it will depend on how fast the government
decides to offload its ownership in the market. The government first sold 5 percent of its shares

17. in November 2001 and then offloaded another 5 percent in October 2002. Both times the
green-shoe option for an additional 5 percent was exercised on account of heavy demand.
Why work in NBP?
NBP maintains its position as Pakistan's Premier Bank with a network of over 1310 branches
locally, 23 overseas branches, 9 National and International Subsidiaries and 10
Regional/Representative Offices all over the world
NBP also have a Joint Venture with UBL at U.K., with the name of Pakistan International Bank
(UK) Ltd., with seven branches at Main Branch, London, Manchester Branch, Glasgow Branch,
Bradford Branch, Sheffield Branch, Birmingham Branch and Knightsbridge Branch (London).
The Bank has employed more than 15,000 people worldwide. There are various departments.
NBP offers unlimited opportunities to its employees for continuous personal and professional
growth
1) Change Management Program: NBP has started an ambitious Change Management Program
to further train its employees to meet the challenges of present day requirements.
2) Training of new staff: Training and development are the core issues of HR, which will
ultimately improve our customer service and help us attain the standard of a progressive bank.
3) Benefits: Besides a competitive financial package, we offer excellent working conditions, job
satisfaction, superior leadership, and a conducive environment for growth.
Employee benefits
The benefits of the NBP’s high profits are instead being enjoyed by shareholders with their
fabulous 125 per cent return on shares, as well as by staff, executives and board of directors in
the form of accelerated promotions and liberally allowed perks, allowances, facilities, fees,
salaries, cash rewards and incentives. It is painful to know that poor pensioners, their widowers
and children are not provided any relief from the bank’s high earning, though they are badly
affected by inflation; despite the fact that the federal government and its other subsidiaries
have been providing relief to their retired employees yearly. Israr Ali has rightly pointed out

18. that this practice is highly unfair, inequitable, and exploitative.
In the light of the above, it is expected that the NBP and their board of directors should now
follow prudent, fair and objective policies to promote judicious and equitable distribution of
profits amongst all stakeholders, including retired employees, without any discrimination.
Grievance procedure
The grievance procedure is a process through which a Virginia state government employee can
bring workplace concerns to upper levels of management. This process is more formal than
mediation and requires that rules be followed strictly. Yes in NBP there is a concept of
grievance procedure employees can concern to upper level management if there is nothing
appropriate happened with them.

19. Lead or lag
NBP has strongest positions among its competitors employees get better pays and befits in
NBP several types of bonuses allowances and incentives also included in their compensation
policy. It uses lead strategy to get better employees and want to retain them. On the other
hand employees get extra befits and incentives and allowances rather than other banks.
Basicpay of manager is approximately60, 000- 65,000.
Compensation adjustments
Outstanding performance merit has not any outstanding rewards butpartially yes
.compensationincreases budget throughout the organization and guidelines for distribution are
clearly communicated. Ranges limits are clearly defined. Other performance compensation
awards are appropriate .they provide profit sharing awards on the base on organization
profitability.special awards are also given for example bonuses for meeting and cost saving or
on the base of profit increase. There is not a concept of performance of teams less teams work
is there. Gain sharing awards are not based on local performance.
Recommendations
Staff strength should be enhanced and only professional and qualified persons should be
recruited .promotions should be done on basis of performance and they should develop
specific performance measures. Organization must do something to reduce biasness which is
mostly used in promotions. They should do proper implementation of pay for performance
system. They should make proper measures and illuminate favoritism. Organization need to
strengthen the HR department.