68064161 What Are Rewards

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May 12, 2011REWARD MANAGEMENT REPORT

Tuba Ashraf 45 University of Karachi 1

BANK

The word BANK is derived from an Italian word BANCO meaning a bench. It is also that

the word bank is derived form a German Word BACK meaning a joint stock that was

Italian zed when a great part of Italy was ruled by Germans. The term bank is being used for

a long time, yet it has no precise definition. The basic reason is that the bank perform not just

one but many types of functions. Originally the banks were supposed to make short term loan

to the traders only. The banks now not only extends short term loans to the fanners, traders,

industrialists etc. but also invest in a wide variety of long term earnings assets.

SOME OTHER DEFINITIONS OF BANK

Binbay Banking Inquiry Committee:

My brains and other people money.

Anerucabs defubed Banking:

By banking we mean the business of dealing in credits, and by Bank we mean include

every person firm of company having a place of business where credits are opened by

deposits or collection of money or currency, subject to be paid or remitted on cheque or

order on money is advanced or loaned or stocks, bonds, bullion, bills of exchange,

promissory notes are received form discount of sale

According to Dr. Hart:

Banking or a bank is person or company carrying on the business of receiving moneys

and collecting drafts for customers subject to the obligation of honoring cheques drawn

upon them from time to time by the customer to the extent of the amounts available on

their current accounts.


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MEEZAN BANK LIMITED

"We must work our destiny in our own way and present to the works an economic

system based on true Islamic concept of equality of manhood and social justice"

Quaid-e-Azam Mohammed Ali Jinnah

Opening Ceremony of The State Bank of Pakistan on July 1, 1948

ORGANIZATIONAL HEIRARCY

Its a general hierarchy of bank which is showing about the main authorities of Meezan Bank

Limited who are controlling its management in Pakistan. Banks management is divided into

different groups, regions and areas. Co-chairman is providing supervision to group heads that

are responsible for controlling the affairs of different groups. After group heads in the

hierarchy, there are regional, hub and area managers who are managing and guiding the

working of different branches of bank.

Board of Directors

The board of directors has the authority in guiding Bank affairs and in making general

policies.

Some directors are the personnel of the Meezan Bank Limited follows

The Board of Directors of Meezan Bank are:

H. E. Sheikh Ebrahim Bin Khalifa Al-Khalifa(C h airman )(Minister of Housing, Ministry of Housing, Kingdom of Bahrain)

Mr. Naser Abdul Mohsen Al-Marri (Vice Chairman)

Mr. Jassar Dakheel Al-Jassar

Mr. Rana Ahmed Humayun


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Mr. Mohammed Azzaroog Rajab

Mr. Ahmed Abdul Rahim Mohamed

Mr. Nawal Ahmed

Mr. Alaa A. Al-Sarawi

Mr. Mian Muhammad Younis

Mr. Irfan Siddiqui (President & Chief Executive Officer)

Mr. Ariful Islam (Chief Operating Officer Shariah Board)

Meezan Bank ha s a ve ry h i gh -c a l i b e r S h a r i a h S u p e r v i s o r y B o a r d ,

c o m p r i s e s o f i n t e r n a t i o n a l l y r e n o w n e d I s l a m i c S c h o l a r s . T h e S h a r i a h

S u p e r v i s o r y B o a r d r e g u l a r l y r e v i e w s t h e b a n k s a c t i v i t i e s a n d

approves a l l new p roduc t s . The bank a l so ha s a re s iden t Sha r iah

adv iso r . Dr . Muhammad Imran Usman i , who mon i to r s day - to -day

t ransac t ions o f the bank .

SHARIA BOARD CONFIGURATION

Justice (Retd.) Muhammad Taqi Usmani Chairman Dr. Abdul Sattar Abu Ghuddah Sheikh Essam M. Ishaq Dr. Muhammad Imran Usmani

SHAREHOLDING CONFIGURATION

Shareholding Structure Rs. in Million


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Pakistan Kuwait Investment Company (PVT) Limited 916 Shamil Bank of Bahrain E.C 612 Islamic Development Bank, Jeddah 220 Noor Financial Investments Company 155 Others 459 Paid Up capital 2,362

Meezan bank is providing services in the market to their customers and shareholders its

nature is reflected by its admission statements.

THE VISION

Establish Islamic banking as banking of first choice to facilitate the implementation of an

equitable economic system, providing a strong foundation for establishing a fair and just

society for mankind.

THE MISSION

To be a premier Islamic bank, offering a one-stop shop for innovative value added products

and services to our customers within the bounds of Shariah, while optimizing the

stakeholders value through an organizational culture based on learning, fairness, respect for

individual enterprise and performance.

THE SERVICE MISSION

To develop a committed service culture which ensures the consistent delivery of our products

and services within the highest quality service parameters, promoting Islamic values and

ensuring recognition and a quality banking experience to our customers

CORPORATE VALUES:

Meezan Bank Limited, a publicly listed company, was incorporated on January 27, 1997 and

started operations as an investment bank in August that year. In January, 2002 in an historic

initiative, Meezan Bank was granted the countrys first full-fledged commercial banking

license as a dedicated Islamic Bank, by the State Bank of Pakistan.

Shariah Compliance


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Integrity

Professionalism

Service Excellence

Social Responsibility

WHAT ARE REWARDS?

Employees do not work for free. Most businesses are not volunteer services, so you have to compensate

them in some way for their time and effort. What used to be called pay and then became remuneration is

today often termed reward. It refers to all of the monetary, non-monetary, and psychological payments

that an organization provides for its employees .From the organizations point of view, rewards are

intended to motivate certain behaviors. But under what conditions will rewards actually motivate

employees? To be useful, rewards must be seen as timely and tied to effective performance. One theory

suggests that the following conditions are necessary for employee motivation.

1.Employees must believe effective performance (or certain specified behavior) will lead to certain

rewards. For example, attaining certain results will lead to a bonus or approval from others.

2.Employees must feel that the rewards offered are attractive. Some employees may desire promotions

because they seek power, but others may want a fringe benefit, such as a pension ,because they

are older and want retirement security.

3.Employees must believe a certain level of individual effort will lead to achieving the corporations

standards of performance.

As indicated, motivation to exert effort is triggered by the prospect of desired rewards: money,

recognition, promotion, and so forth. If effort leads to performance and performance leads to desired

rewards, the employee is satisfied and motivated to perform again.

REWARDS IN THE ORGANIZATION

It is through the organization's reward system that good employees are attracted to the

organization,decide to stay within the organization and then consciously decide to perform well.

Employees perform at the level at which the organization rewards them .People continue to do what they

have been rewarded for doing. This is a form of positive reinforcement.Yet managers must know what


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rewards mean the most to which employees in order to be the most effective. To give John a bigger office

when he actually responds better to more money does not elicit the desired performance over the long

run. An inappropriate reward has been offered. This mismatch of reward with the individual may have

the same ultimate effect as giving no reward at all.Therefore, the astute manager must know eachemployee and what rewards will effectively motivate them. In addition, the manager must be constantly

aware of the rewards available in the organization. To compensate for rewards not available, the manager

must be creative and work within the boundaries of the organization to create a menu of rewards for staff

members.

REWARD SYSTEMS CONSIST OF THE FOLLOWING ELEMENTS:

Financial Rewards - Compensation

Base Salary Pay Incentives Employee Benefits

Traditional Pay schemes

Time Rates

It is usually paid on hourly or weekly basis and due to the definite nature of the reward itmay not motivate

all the employees. It is easy to implement and understand.

Payment by Result (PBR)

There are different types of PBR incentive schemes in practice some of which are:

Individual time saving is the incentive is paid for time saved in performing aspecified operation. Measured Day-work is in which employees are paid a fixed amount as long asthey maintain a

predetermined and agreed level of working.

Group and plant-wide incentives are in which employees in the plant or other organization sharein a pool bonus that is linked to the output.

Commission is a Bonus payment which is usually linked with sales. The reward is sometimes pre determine figure or is a percentage of thetotal sales figure.

Modern pay schemes

Incentives & rewards

Financial incentives: to motivate people to achieve their objectives, improve their performanceby focusing on specific targets.

Financial rewards: provide financial recognition to employees for their achievements.


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Competence related pay

Method of rewarding people wholly by reference to the level competence they demonstrate incarrying out the roles

Pay is related to competence and

People may be rewarded with reference to their level of competence.

Skill based pay

Links the pay to the level of skills used in the job And sometimes acquisition and application of additional skills by the person carrying out the

job

Team based rewards

Payments or other forms of non-financial rewards provided to members of a formallyestablished team.

It is not easy to designProfit sharing

To encourage employees to identify themselves more closely with the company

To stimulate interest in the employees in the affairs of the company as a whole To encourage cooperation between management and employees. Stock options Right to purchase a specific number of shares of company stock at a specificprice. It is long term executive incentive and retention tool

Merit pay

Gives salary increases to individualsbased on their supervisors appraisal oftheir performance. Purpose is to improve motivation and retain the best performers.

Employee benefits

Elements of remuneration given in addition to various of cash pay. Pension scheme, insurance cover It might also include benefits that are not strictly remuneration like holidays.


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Statutory and voluntary benefits

Statutory benefits are to be given to employee by the organization regardless whether it wantsor not.

Voluntary benefits: holidays, vacation, special leave, sick leave, health insurance ,medicalbenefits, subsidized meals at canteen

Non-financial Rewards

Non-financial rewards should form one important part of a complete employeerecognition program

along with monetary rewards. Each motivates employees differently. Non-monetary rewards can be

used for either individual or team rewards.

Intrinsic Rewards - centers on the work itself Praise, recognition, time off and other rewards given to the employee by peers or superiors.

Opportunity to Learn, Develop and Advance as an Employee.

Employees understand they need to grow, learn and develop new skills in order to advance.

The ability to be able to choose their assignments and rise to new challenges offered by new

responsibilities.

Flexible Hours.

Family, children, friends, church, sports, hobbies and other activities all have demands on

today's employees. A flexible schedule or the occasional afternoon off can help employees

meet some of these obligations. By allowing some flexibility in an employees schedule you

can increase their desire and motivation. This, to some, is considered the most important of

the non-monetary rewards in the workplace.

Recognition.

In today's high paced work environment it is reported that employees consider it very rare

and infrequent that they receive recognition of their work and efforts. Think about it - What

better way to have employees continue their good work and success then to offer them

praise-verbal, written or ideally a public announcement or employee award? Recognition is

probably the most sought after of the non-monetary rewards inthe workplace.


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The Opportunity to Contribute.

The opportunity to be part of the team. To work closely with managers and

management.To be involved in key decisions.To be listened to and heard

Independence and Autonomy.

Employees want to be able to work independently. They do not want someone constantly

watching over them and questioning their every move. They like to receive their

assignments -preferable with the time frame required for completion and then have the

independence to complete the work given the guidelines and framework you have set on

their own merits. This may not be seen as one of the more obvious non-monetary rewards in

the workplace, but it is definitely an important one.

TYPES OF REWARD

Many managers believe that people only work for money. However, you must remember that there are

two basic types of reward.There are extrinsic rewards, which cover the basic needs of income to

survive (to paybills), a feeling of stability and consistency (the job is secure), and recognition (my

workplace values my skills). InMaslows Hierarchy of Needs, these are at the lower end. We could also

call these the financial rewards.On the other hand, there are intrinsic rewards, the most important of

which is probably job satisfaction, a feeling of completing challenges competently, enjoyment, and even

perhaps the social interactions which arise from the workplace. These are at the upper, self-efficacy end

of the need hierarchy. We could also call these psychological rewards.

OBJECTIVES OF REWARD SYSTEM

Reward systems have three main objectives: to attract new employees to the organization, to elicit goodwork performance, and to maintain commitment to the organization.

ATTRACTION

A reward system is intended to attract and retain suitable employees. An employer who develops a

reputation as cheap is unlikely to be desirable in the job market, because potential employees will

think it does not reward effort. Such an organization is likely to end up with the people that nobody else

wants.

A GREAT PERFORMANCE


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Rewards are also intended to maintain and improve performance. As we have stated in earlier

articles,nobody can truly motivate: employee motivation can only come from within. But the promise of

a bonus or a pay rise is intended to encourage employees to motivate themselves to reap the

rewards.Performance-related pay is very popular currently in organizations. Recently, over 70per cent of companies offer it in some form around the world. Some companies have three different kinds

of performance-related pay: individual, team, and organization. The main problem with individual

performance-related pay (IPRP) is that it assumes that pay alone motivates workers, but this is not

correct.Consider the intrinsic rewards or psychological rewards mentioned earlier. A worker with high

pay but who receives no intrinsic rewards will probably go elsewhere.

COMMITMENT

The reward system also serves to maintain and strengthen the psychological contract. It indicates what

behaviour the organization values, i.e. what is paid for. For example, if your company values team

work,then there will probably be a team bonus of some kind.

DETERMINANTS OF REWARDS

These features are contingencies, which affect the suitability and design of rewards to

varying degrees. The effective use of rewards depends on 3 variables.

Individual

Work situation Incentive plan1.The individual and the rewards:

Different people value things differently. Enlightened managers realize that all people

do not attach the same value to monetary rewards, bonuses, prizes or trips. Employees

view these things differently be of age, marital status economical need and future objectives

.however even though employees reaction to rewards varies greatly, rewards must have

some redeeming merits. For e.g. there might be a no of monetary and non monetary rewards

to motivate employees.

2.The work situation:

This is made up of four important elements,

Technology:Machine or work system, if speed of equipment operation can be varied, it can establish

range of the rewards.

Satisfying Job Assignment:


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A workers job may important a number of activities that he finds satisfying. Rewards may

take the form of earned time off, greater flexibility in hour worked, extended vacation time

and other privileges than individual values.

Feedback

A worker needs to be able to see connection between works and rewards. These responses

provide important reinforcement.

Equity Worker considers fairness or reasonableness as a part of the exchange for his work.

Rewards in general are important motivator.

Their effectiveness depends upon 3 factors

Drives Preference value and Satisfying value of the goal objectives

WHY REWARD?

An organization's reward system serves both internal and external functions. The internal benefits

include increased job performance, decreased absenteeism and decreased turnover. A good reward

system motivates people to work harder. Increased productivity, therefore, saves the organization

money in both overtime and additional employees. Better motivated employees have a lower

absenteeism rate and remain in the job longer. These two conditions save the organization's resources

even more Externally, the organization is able to attract better people. Those seeing employment

opportunities are more attracted to an organization offering a better reward system.

Then once in the organization, the reward system often determines if the employee will stay and then

ultimately, if he will perform.Punishment, the opposite side of the coin from reward, is not as effective

in evoking long-term changes in performance. Numerous behavioral studies have proven that the use of

positive rewards produces the desired results better than punishment. Negative reinforcement tends to

disrupt the behavior temporarily and may often have undesirable side effects.Rewards are an incentive

to workers. The anticipation of the rewards, however, is the real incentive. It is this anticipation that

spurs employees on to perform in the ways which the organization rewards.


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PROLETARIAN WORKER

The proletarian class who typically performs manual labor and earns an hourly wage. These workers are

distinguished from those in the service sector and from administrative workers, whose jobs are not

considered manual labor. Proletarian class work may be skilled or unskilled, and may involve

manufacturing, mining, building and construction trades, mechanical work,maintenance, repair and

operations maintenance or technical installations. The executive worker, by contrast, performs non-

manual labor often in an office; and the service industry worker performs labor involving

customer interaction, entertainment, retail and outside sales, and the like.

ADMINISTRATIVE WORKER

The term administrative worker refers to a salaried professional or an educated worker who

performs semi-professional office,administrative and sales coordination tasks as opposed to a

proletarian worker,whose job requires manual labor.

THEBEST WAYS TO REWARD EMPLOYEES

Every company needs a strategic reward system for employees that addresses these four areas:

compensation, benefits, recognition and appreciation. The problem with reward systems in many

businesses today is double: They're missing one or more of these elements (usually recognition

and/or appreciation), and the elements that are addressed aren't properly aligned with the company's

other corporate strategies. A winning system should recognize and reward two types of employee

Culture

Performance

Managemet

Employment

LabourRelations

Training

Rewards


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activity-performance and behavior. Performance is the easiest to address because of the direct link

between the initial goals you set for your employees and the final outcomes that result. For example, you

could implement an incentive plan or recognize your top salespeople for attaining periodic goals.

Rewarding specific behaviors that made a difference to your company is more challenging thanrewarding performance, but you can overcome that obstacle by asking, "What am I compensating my

employees for?" and "What are the behaviors I want to reward?" For example, are you compensating

employees for coming in as early as possible and staying late, or for coming up with new ideas on how to

complete their work more efficiently and effectively? In other words, are you compensating someone

for innovation or for the amount of time they're sitting at a desk? There's obviously a big difference

between the two.

The first step, of course, is to identify the behaviors that are important to your company. Those activities

might include enhancing customer relationships, fine-tuning critical processes or helping employees

expand their managerial skills.

When business owners think of reward systems, they typically put compensation at the top of the

list.There's nothing wrong with that, since few people are willing or able to work for free. But the right

strategy should also include an incentive compensation plan that's directly linked to the goals of

your company for that period. You might want to include some type of longer-term rewards for key

individuals in your organization. Historically, this has often included some form of equity ownership.

Benefits are another type of reward in a strategic reward system, and your employees are definitely going

to notice the types of benefits you provide. Companies that don't match or exceed the benefit levels

of their competitors will have difficulty attracting and retaining top workers. This is one reason an

increasing number of businesses are turning to professional employer organizations like Admin staff to

gain access to a broader array of company benefits.

However, you can't diminish the importance of recognition and appreciation as integral components of a

winning strategic reward system. These two elements rarely receive the attention they deserve from

business owners, which is amazing because they're the low-cost/high-return ingredients. Employees like

to know whether they're doing good, bad or average, so it's important that you tell them. Recognition

means acknowledging someone before their peers for specific accomplishments achieved,actions taken

or attitudes exemplified through their behavior. Appreciation, meanwhile, centers on expressing gratitude

to someone for his or her actions. Showing appreciation to your employees by acknowledging excellent

performance and the kind of behavior you want to encourage is best done through simple expressions and

statements. For example, you might send a personal note or stop by the employee's desk to convey your

appreciation. Another approach is to combine recognition and appreciation in the form of a public


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statement of thanks in front of the employee's co-workers or team,citing specific examples of what

they've done that has positively impacted the organization.

Now that you know what it should include, it's time to review your strategic reward system. Does it

address compensation, benefits, recognition and appreciation? Is it aligned with your remaining businessstrategies? Is it driving the right behaviors for your company, as well as your performance goals? If it

needs fixing, don't wait. It can mean the difference between your business' success and failure.

Reward system in Meezan Bank:

At Meezan bank rewards are clearly linked to performance. About half of pay is tied to

company and divisional performance. The reward system reinforces the company's high

expectations of its employees to grow, learn, and lead. The appraisal and reward system is

aimed at increasing employee involvement in the goals and objectives of the organization,

and encouraging individuals to go beyond their scope of work, undertake voluntary projects

that enable them to learn, and contribute innovative ideas in meeting the targets of the

company. Reliance places great emphasis on soft, conceptual and cross-functional skills,

especially at managerial levels.The company's reward system improve performance

throughout the organization. The employees are given good pay packets. SS is a hierarchical

organization. So the higher pay and benefits of higher positions motivates lower cadre

employees to perform well and acquire promotions.Strategies for rewarding employees

performance and contributions include both non-financial and financial mechanisms. Some of

the primary ones are discussed below.

Progression through the salary range

- Employees receives salary increases to recognize the attainment of new and/or the

enhancement of existing skills/competencies or for assuming increased responsibilities within

the scope of the current position. The salary increase represents a progression through the

salary range approved for the position.

Promotions

- Promotions are typically associated with an increase in salary, and the increase may be any

amount up to 10% of an employees current salary. The new salary also will be within the

salary range approved for the position.

Merit Pay

- Supervisors gives employees an annual merit increase to recognize consistently meritorious

performance or successful completion of a project that had a significant impact on a


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overall culture and climate of organizations.Reward systems are a major cost factor in many

organizations. There are some criteria for building effective reward systems.

Give Value for the employees preference in the reward system. Employees prefer rewards in

different ways like cash awards, plaques, recognition in award ceremonies and companynewsletters.

Reward systems should simple and specific. Easy understanding of the system will make the

system work effectively. Elaborate procedures, evaluations and review by different levels

will lead to confusion among people. A line of sight should be maintained between rewards

and actions.

Rewards should be timely. The recognition/rewards should be provided frequently enough to

make performers feel valued for their efforts.

Reward systems should be fair and effective.

It should be reliable, that is, the program should operate according to its principles and

purpose.

Involve people in the formulation of the reward system. By ensuring the participation of the

people in the reward system, the company can empower them to do the need ful.

For most people, the most important reward is the pay they receive for their work. Effectively

planned and administered reward systems will enhance motivation thus performance also.

Employees who work hard and produce better quality products should get higher pay than the

poor performers. The employee sshould be satisfied with the rewards they receive for their

good work. They should be given extrinsic rewards like pay, promotion and other status

symbols. This will give them a feeling of competence,achievement, personal growth and self-

esteem.

In Pakistan, rewards are given in the form of financial benefits, incentives, profit sharing,

gain sharing and stock options. Financial rewards are given to employees for their

achievements. Pay is of many types like Competence related pay, Skill-based Pay, Team-

based pay and merit pay.


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