Conflict Resolution at HBL Term Report

CONFLICT RESOLUTION AT HBL - TERM REPORT

Ghania Shaikh Maria Abdul Razzaq Syed Raza Hassan Syed Salman Hassan
COMPARATIVE MANAGEMENT BBA-8 IBA, KARACHI MAY 06 2013

Syed Sameer Hasan

Conflict Resolution at HBL Term Report

TABLE OF CONTENTS
Page No.
Abstract -----------------------------------------------------------------------------------------Executive Summary --------------------------------------------------------------------------Introduction -----------------------------------------------------------------------------------Background -----------------------------------------------------------------------------------Introduction and History of the Organization ----------------------------------------Industry Analysis ---------------------------------------------------------------------------Methodology ---------------------------------------------------------------------------------Findings ---------------------------------------------------------------------------------------Dispute Resolution Process --------------------------------------------------------Arbitration ----------------------------------------------------------------------------Litigation ------------------------------------------------------------------------------Problems in Dispute Resolution Process at HBL --------------------------------Analysis ----------------------------------------------------------------------------------------Literature Review and Analysis of Findings -------------------------------------Recommendations -------------------------------------------------------------------Conclusion ------------------------------------------------------------------------------------03 03 04 04 06 06 07 08 08 09 09 10 13 13 16 18

Contributions Page Bibliography Appendix

Conflict Resolution at HBL Term Report

Abstract
Conflict resolution is an important subject area which has gained considerable importance as organizations have looked to expand, incorporate the impacts that globalization has in store and the need to depict greater acceptance towards diversity in its various forms. This report covers the conflict management at HBL, primarily after the privatization in 2002. Several factors have contributed towards conflict situations at HBL and the cases have had a considerable impact on the organizational performance. The findings have been integrated with literature review and analysis in the light of Pakistans organizational culture. Lastly, various recommendations have been made to address the flaws and potential issues that are embedded within the conflict resolution strategy at HBL.

Executive Summary
Changing management styles and structural changes which have been made to organizations may take the form of several conflicts that emerge at a later stage. The intended purpose of this study is to evaluate the conflict situations at HBL, the reasons behind them and the ways in which the top management or the managers at HBL responded to the conflict situation. In the beginning, we have provided the reader with the insights that we sought by interviewing people at HBL. The post privatization period, that is, after 2002, had posed considerable challenges to the top management at HBL. While at one end of the spectrum they had to come to terms with excess staff, at the other end they looked to address the problem of decreasing productivity. Layoff steps in the beginning backfired as employee morale worsened, a downfall in productivity was seen and job insecurity among the middle and lower level management rose significantly. All these combined, resulted in interpersonal and employee-management conflicts. Moving, the report talks about the strategies that were implemented by HBL to address these conflict situations. Mostly, managers used a dominating approach, whereby managements interests were safeguarded and little attention was paid to the individuals interests. There was lack of communication and no clear policy guidelines which further created ambiguity within the organization. Furthermore, with the help of literature review, an analysis has been conducted into the findings to assess where the management misread the problem. An intriguing feature of this analysis is that cultural aspect of Pakistani organizations has been included which would give the reader a clear insight into how a typical Pakistani manager is, the organizational culture and workplace environment and how the management addresses to a conflict situation in Pakistan. To further strengthen our analysis, detailed recommendations on how HBL must improve its conflict resolution approach have been outlined.

Conflict Resolution at HBL Term Report

Introduction
Conflict resolution is an area which has long remain unaddressed, atleast officially, in the Pakistani context for being a typically collectivist society. It is assumed that individual interests are secondary to the interests of the organization as a whole, rather than the need to understand that the two work in parallel. After the steps of privatization which were taken in various industries in Pakistan, conflicts started emerging all the more, and perhaps a need to find a concrete approach to resolve them further added to the challenges already faced by organizations. The intended purpose of this report is to dig down into the conflict situations that arose at HBL post privatization in 2002 and later years, conduct an analysis by incorporating the cultural dimensions as laid down by Hofstede and Trompenaar, and finally to come up with recommendations that must be introduced at all management levels to reduce the frequency of these conflicts and to extract positive learning out of them.

Background
Conflict situations have almost become an integral part of organizations all around the world. Management restructuring, the introduction of a technological change or tough economic times, all these have been the major driving force behind the conflicts that have emerged in Pakistani organizations. Most disagreements and conflicts that occur at HBL are policy driven. HBL underwent a major change in its structure and procedures and policies after its privatization in 2002. The managerial change was a necessity since numerous problems stringed with listed companies required attention. Two major problems were; Excess Staff o HBL, pre-privatization was over staffed with employees in excess of 31,000. An organization which had long been impacted by close family ties meant that nepotism was almost a certainty. This included both the management and non management staff. The new management wanted to reduce the number to 27,000 employees. Excess staff was seen as a major contributing factor towards organizational inefficiency and low productivity levels. The said period saw several new entrants in the Banking Sector within Pakistan, therefore, it was important that HBL revisits its workforce size, hence lay off had become almost inevitable.

Conflict Resolution at HBL Term Report

Inefficiency and Under performance o Like all nationalized institutions, HBL too was heavily reliant and influenced on government policies and procedures before 2002. The sheer size of HBL made it too important an organization to be left independent hence the bank remained under strong government supervision. Owing to macroeconomic instability and inconsistent government policies, it was imperative that HBL's performance and polices took a hit. The deteriorating performance was considered to be an impetus that led to the privatization of the company in the prospect of improving efficiency and competing well within the market.

Resistance that followed Privatization

Like any other change, steps towards privatization were seen with great skepticism by the existing employees at HBL. Transformation from a public company to a private company came across as a threat to them, for years they had been well settled in the bureaucratic structure and polices that had held the organization for most of its period of nationalization. It was hard for employees to accept and adjust to the new policies and the new structure that would come in as a result of privatization. They resisted, considering the new system unfriendly to existing employees and it was only a matter of time before the clash of interests sprang across the organization and led to significant detrimental impacts in the form of conflicts. The intended purpose behind HBLs retrenchment program was to reduce the number of clerical staff and instead employ more technology savvy employees, who were better trained to serve the modern day customer. With this, HBL looked to achieve higher levels of productivity; however, the change by far surpassed the negative consequences, which HBL had less perceived of. . It is important to note here that layoffs in Pakistani environment are not easy for factors such as Ascription (seniority) as identified by Trompenaar and valuing relations above performance have long been a part of the culture (Collectivism as suggested by Hofstede). HBL however provided them with compensation, packages and even provided them new jobs in other organizations but despite these efforts, HBL failed to gratify employees and secure their satisfaction, resulting in a few litigation cases still pending. Moreover, prior to privatization, HBL employees had the privilege (in some conditions) of getting their children employed in the Bank after their retirement/death, depicting nepotism which is a routine aspect of organizations in this part of the world. However, with privatization and the introduction of new reforms, human resource management and the hiring of skilled employees was preferred. The idea behind this structural change was to ensure improved company performance, which was greatly undermined due to the emergence of various conflicts that followed privatization. The problems that HBL experienced, post privatization shall be the central focus of our report. We intend to study these problems in light of the literature review and the company findings,

Conflict Resolution at HBL Term Report

followed by recommendations. Moreover, in our study we shall look to build a relationship between these problems and the culture of Pakistani workplaces.

Introduction and History of the Organization

HBL is the largest bank of Pakistan, headquartered in Karachi. It was the first commercial bank of Pakistan which now has more than 1500 branches and 830 ATMs across the country and a customer base of over five million. HBL has a domestic share of more than 40% where it dominates the commercial sector with inward foreign remittances and loans to small industries, traders and farmers. Habib Bank was created in 1941 in Bombay as a commercial bank to serve the Indian Muslim the community. After partition the banks headquarter was moved to Karachi and the Habib family continued to own and manage the bank until the government nationalized it in 1974. In 2004 Pakistan's Privatization Commission announced that the Government of Pakistan had formally granted the Aga Khan Fund for Economic Development (AKFED) rights to 51% of the shareholding in HBL, against an investment of PKR 22.409 billion (USD 389 million). 42.5% of the shareholding is retained by the Government of Pakistan (GOP), whilst 7.5% is owned by the general public i.e. over 170,000 shareholders following the public listing that took place in July 2007. With a presence in 25 countries, subsidiaries in Hong Kong and the UK, affiliates in Nepal, Nigeria, Kenya and Kyrgyzstan and rep offices in Iran and China, HBL is also the largest domestic multinational. The Bank is expanding its presence in principal international markets including the UK, UAE, South and Central Asia, Africa and the Far East. Key areas of operations encompass product offerings and services in Retail and Consumer Banking. HBL has the largest Corporate Banking portfolio in the country with an active Investment Banking arm. SME and Agriculture lending programs and banking services are offered in urban and rural centers.

Industry Analysis
Dr. Ishrat Hussain in his article on the banking sector in Pakistan quotes the IMF and the World Banks joint assessment of the Pakistani banking sector in 2004 giving the following conclusion: for reaching reforms have resulted in a more efficient and competitive financial system In particular, the predominantly state-owned banking system has been transformed into one that is predominantly under the control of the private sector. The legislative

Conflict Resolution at HBL Term Report

framework and the State Bank of Pakistans supervisory capacity have been improved substantially. As a result, the financial sector is sounder and exhibits an increased resilience to shocks. With 80% of the banking assets held by the private sector and privatization of the nationalized commercial banks, the 1990s banking sector reforms initiated a culture of professionalism and focus on service instead of bureaucracy and apathy. The increased profitability due to removal of inefficiencies and a wider product range is being used to increase the capital base of banks. The borrower base of banks has expanded four folds in the last few years as the banks diversify into agriculture, SMEs, consumer financing, corporate loans, mortgages, and etcetera. Banking Technology that was almost non-existent in Pakistan until a few years ago has revolutionized the customer services and access on-line banking, Internet banking, ATMs, mobile phone banking/branchless banking and other modes of delivery have made it possible to provide convenience to the customers while reducing the transaction costs to the banks. The Credit Cards, Debit Cards, Smart Cards etc. business has also expanded. According to Dr. Ishrat Hussain the human resources of banks has also improved due to the adoption of the principles of merit and performance throughout the industry. Recruitment is done through a highly competitive process and promotions and compensation are linked to training, skills and high performance. The banks now routinely employ MBAs, M.Coms, Chartered Accountants, IT graduates, economists and other highly educated persons rather than Clerical and Non Clerical Workers. The banking industry has become the preferred choice of profession among the young graduates. According to an FBR study, as of June 2010, the banking sector comprised 36 commercial banks (including 25 local private banks, 4 public sector commercial banks and 7 foreign banks) and 4 specialized banks with a total number of 9,087 branches throughout the country. Among the banks, there are 6 fully fledged Islamic banks as at end of June 2010.

Methodology
Before conducting a primary research focused on HBL we first prepared a literature review. The secondary research was used to understand the implications of conflicts and disputes that may arise in an organization. We used various journals and research papers to find out the different types of conflicts that exist, different studies on conflicts in Pakistani organizations and their management. To get a first hand insight on how HBL managed the conflicts that occurred after its privatization we conducted two interviews with Ms Hina Saqib and Mr Muhammad Arshad, HR executives at HBL. The transcript of the interview is attached in the appendix of this report. We used these to

Conflict Resolution at HBL Term Report

analyze the issues arising out the structural change and the procedures adopted by HBL to counter them.

Findings
DISPUTE RESOLUTION PROCESS:
The conflict resolution process, also known as the dispute resolution process at HBL is comprises of four phases, where each phase plays an important role in ensuring that a positive outcome is reached, whereby the emergence of conflicts in some way proves to be source of value addition for the organization. Negotiation: The negotiation process is headed by the senior vice president of Human Resource and the head of the Disciplinary Committee. All parties to the conflict approach the HR department and in most cases it is the employees who put forward their grievances against the management as well as a possible solution which they think best addresses the issue at hand. The HR department and the Disciplinary Committee aims to minimize concessions and tries to negotiate the conflict in favor of the management by making employees compromise on their demands. They makes sure that if negotiations is the only means of resolving the dispute, then the terms of the management are upheld and compromised to the bare minimum. It is believed that resolving the dispute at the negotiation phase is in the best interest of the organization, however in case the process of negotiation fails, the next phase is mediation. Mediation: Negotiations do tend to work in the Pakistani work environment especially in cases where there is a powerful management against the less empowered workforce. However, when negotiations fail, managers at HBL consider mediation. The mediator usually is a member of the HBL management acceptable to both parties. The mediator acts as a communication route between the grieving parties. Stage 1: Winning trust of the concerned parties During the first stage, the mediator plays a passive role. The main task is to gain the trust and acceptance of the conflicting parties, so that they begin to believe that he/she will be capable of assisting them fairly as a person on whom they can rely at all times. For this purpose HBL chooses a mediator with the mutual consent of employees and the management. Mediator in

Conflict Resolution at HBL Term Report

HBL is usually an internal, neutral person trusted by both management and employee. He leaves most of the talking to the disputing parties, but listens attentively and asks probing questions to pinpoint the causes of the dispute, obstacles to a possible settlement and to identify the issues in order of priority. Once credibility is achieved and sufficient background knowledge gained, the mediator may begin to persuade the parties to resume negotiations, possibly with a fresh perspective. Stage 2: Managing the Negotiation Process In the second stage, the mediator intervenes more actively in steering the negotiations. He/she may offer advice to the employees and the management, attempt to establish the actual resistance point of each party and to discover areas in which compromises could be reached. The mediator encourages parties to put forward proposals and counter-proposals and (when a solution appears feasible) will begin to urge or even pressurize the participants towards acceptance of a settlement. In our findings, we found out that mediator is considered to have a powerful position within the conflicts and his judgment of an ideal solution or the best possible route to the problem is where the conflict resolution heads towards. Stage 3: Reaching out on a Final Settlement In the final settlement the mediator decides to finish the matter quickly. He/she uses bi-lateral discussions with individuals or groups and during the final stages may actually suggest or draft proposals for consideration. In the event of a final settlement being reached, the mediator assists the parties in the drafting of their agreement, ensuring that both sides are satisfied with the wording, terms and conditions of the agreement.

Arbitration:
Arbitration is growing in popularity n the Pakistani management culture partly due to the inefficiency of the justice and legal system. Delayed decisions, time lags and financial concerns pave the way for arbitration as an acceptable means of dispute resolution. Managers at HL often go for arbitration if time is pivotal and delays cannot be afforded. Arbitrators acceptable to all parties are chosen and the ADR (Alternative Dispute Resolution) Process kicks in. Also arbitration awards are easier to enforce hence they're preferred more.

Litigation:
HBL has a high profile legal team which is capable of handling any major and minor lawsuit against it. Differences between management and employees rarely go on towards litigation and lawsuits as efforts are made towards achieving an amicable solution within the organization only.

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Even if disputes are not resolved and employees do end up in filing legal charges, managers are not threatened; the employees do not have the will, or the financial resources to fight with the management on court. Employees do realize they could even lose their jobs over this.

PROBLEMS IN DISPUTE RESOLUTION PROCESS AT HABIB BANK LTD

In an organization of the size of HBL where there is diversity of thought, gender, race, and culture, conflict is inevitable. As long as these are functional conflicts which do not need formal resolution processes, they help an organization improve and work efficiently. Functional conflicts need an environment where communication flourishes so that employees can resolve disagreements, disputes and conflicts, in a manner that is least detrimental to the organizations cause. There are a variety of problems that were explored while analyzing the dispute resolution process at HBL. INSTANCES WHERE MANAGEMENT FAILS TO REDUCE THE OVERALL LEVEL OF CONFLICT The dispute resolution process which aims to find solutions to conflicts was not successful and some form of dissatisfaction and resentment persisted. When HBL downsized after privatization, the new management wanted to do away with the lower level staff which was overloaded and paid way above the average market rates, for years of commitment and the increment policies that HBL followed. The management instead wanted to hire more skilled labor that would add value to the bank and improve its performance. This decision to downsize was conveyed in the worst of ways to the lower level staff by word of mouth and rumors through unofficial communication channels, which ultimately led to an outcry from the employees. Although they were being offered other incentives such as golden handshakes and alternate employment opportunities, the management by and large failed to reduce the overall level of conflict. ABSENCE OF PRE AND POST DISPUTE ANALYSIS In our interviews, we found out that HBL lacks a proper pre and post resolution analysis process. The resolution process was not followed by a concrete feedback on the resolution activity, the costs associated with the conflict, how well the resolution was met and if the concerned parties are satisfied with the eventual outcome. Also, little or no analysis is conducted from an organizational standpoint. For instance, when HBL decided to downsize after the initiation of privatization, the management was not sure if the desired outcome would be achieved, and in a way that the organization intends to. Furthermore, when HBL went towards retrenchment, and successfully but with great difficulty achieved it, managers did not do any proper formal analysis with the top executives of what were the difficulties they faced and how to make sure they do not reappear in the future if a similar situation arises. Also, there was no evaluation of results that appeared from

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retrenchment, which showed the lack of a visionary approach that is necessary for any organization to be successful. ADVERSE IMPACT ON EMPLOYEE-MANAGER RELATIONSHIPS As the process did not manage to satisfy all or most of the parties and caused more conflicts in return, it became a basis for more personal conflicts among individuals which adversely affected the work relationships and the organizations productivity as a result. Therefore, the conflict resolution approach that HBL had adopted did not promise to foster effective long term relationships among colleagues giving rise to feelings of dissatisfaction and emotional disparity among employees in the same department or between an employee and manager. In the case of HBLs formal dress code policy, a senior manager pointed out an individual in front of his junior colleagues making him feel insulted and hating the manager for doing so, causing him to feel demoralized to perform any task given by the manager with eagerness. Such incidents started happening on a routine basis and the lower level management often felt disconnected or hard done by the top managements policy; results were low productivity levels. LACK OF EMPLOYEE EMPOWERMENT Employees at HBL lacked sufficient empowerment to effectively challenge the management. Managers were at such levels of job security where they could become complacent, while the employees believed that they did not have enough power to challenge the system or raise their voice against it. This left any conflicts un-surfaced and un-resolved until the conflict matured and had sowed seeds for even severe results in future. Also, because of less employee empowerment, employees did not care to see the organization progress and worked on average motivational levels for the sake of securing their jobs. They did not believe in their personal growth being closely tied to that of the organization, hence employee turnover rates had also increased during the period. HBLs management used a dominating style of resolving conflict rather than using collaborative style. Employees interests were unheard and management did not collaborate to earn a win -win situation. Employees were not involved in policy implementation which led to ambiguity among workers where they were not sure of the reasons behind the implementation of any change measures that were introduced and what are the goals of the organization. It was evident that the post privatization stage lacked the top managements vision that employees are the people who work at the operational level; hence it is essential that they be involved in policy implementation in order to secure the desired objectives. All these issues culminated to point where conflicts had become inevitable, most of them of serious nature. While resolving conflicts the management did not encourage written inputs or even oral feedback from the employees. Discussions were not held with employees to uncover issues that they had. Thus, employee participation was little and even there were instances where

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the top management gave little heed to the importance of moving towards a participatory management style.

ABSENCE OF EFFECTIVE COMMUNICATION NETWORK

The dispute resolution process was unplanned because the managers were often unaware of the conflicts due to lack of communication with the employees. Personal discussions were seldom held. Moreover, the management used informal or rather inappropriate methods of communication to inform employees about their dismissal. The reasons were not explained for the downsizing which further strengthened the already existing ambiguous environment and gave rise to employee resentment. Furthermore, those who were retain had also become uncertain of their future with HBL, and their focus was drastically shifted from being work focused to merely secure their jobs. While downsizing, employees got multiple messages in the form of rumors and grapevine. This made all employees feel extremely insecure and stressed; and a feeling of mistrust between the employees and the management. Such distorted communication channels led every employee to have an understanding of his own, whereas the organizations intended message on several instances would take a different route altogether. Consequently, there was no integration between the organizations intended message and that interpreted by the employees. The management was not willing to share complete information with their employees which led to employees having incomplete information about the organization. When this happened employees misunderstood what was happening and assumed it as something not in their favor. This misunderstanding further enhanced the conflict as the employees made their own deductions. UNSATISFACTOY APPLICATION OF RESOLUTION PROCEDURES The employees of HBL were not allowed to participate or give feedback even though they were the ones that directly contacted with the consumers. Resolution procedures were applied in areas where management thought it was important without employees consideration and suggestions. The employees were given tasks and forced to work without management delving into the root cause of the problem. What appeared on the surface was what the management would take and made their decisions upon. This could be reasserted with the fact that when negotiating with labor unions, the management appointed a mediator whom the employees preferred and would look upon to as their role models. Hence the management would easily turn the table in their favor by forcing employees to agree on what the mediator asked for. POLICIES NOT UPDATED AND EMPLOYEES NOT AWARE OF NEW POLICIES Even though new policies were meant to increase the organizational effectiveness, the inability of the managers to communicate and ensure that employees all around the organization understood new policies led to inefficiency. HBL is more organization centric meaning that

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interest of the organization takes priority over employees. Moreover, the workplace style changed dramatically in HBL, however the management did not incorporate the changing needs of their employees within new policies. Hence, employee needs were unmet which led to frequent conflicts. Another factor that was of concern was the ambiguity and less clarity of job descriptions. The management was unable to communicate clearly what they expected of their employees and how their performance was tied to rewards. This affected the motivational levels of the employees who preferred to give an average performance and not get rewarded. The performance measurement criterion was not clear to the management itself, therefore inconsistent reward and motivation policies were experienced. IMBALANCE OF FORCES OF CHANGE AND STABILITY Change process must be a gradual one and management must not rush to achieve the desired outcomes. Contrary to this, the management at HBL did not give adequate time to employees to adapt and become familiar with change and understand the managements vision behind the proposed change. Therefore, an imbalance of forces of change and stability were evident and had its detrimental impact on the organizational performance on the whole. LITTLE EFFORT TOWARDS HAVING A WELL DEVELOPED ADR POLICY HBL did not have any formal ADR policy for dispute resolution process to make sure that disputes are solved in an organized fashion. Rather the process was very informal and unclear to employees. There were no guidelines regarding the investigation committee to investigate the conflicts and how an amicable situation may be reached. In the next section of our report, we have outlined several recommendations for HBL in light of the literature review and after analyzing our findings thoughtfully.

Analysis
LITERATURE REVIEW and ANALYSIS OF FINDINGS
With differing cultures across boundaries, conflict resolution strategies are different in different countries. India, being the closest to us, we read up on the conflict resolution strategies prevalent in India. Kaur (2009) found out that almost 70% of the conflict cases in Indian banks are heard and a solution is achieved which is significantly higher than in case of Pakistan. The conflict resolution strategy that Indian Banks employ is Dialogue Process by virtue of which managements give due attention to the grievances of their workers, for they know that the organizational growth is tied to employee productivity and the two cannot work in isolation. As suggested by the Hofstede comparison, it is evident that Indian culture is more achievement oriented and Individualism is high in India, therefore it is important to account for individual needs and opinions for the organization to flourish. This is extremely important while resolving

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conflicts and to ensure that such situations do not reoccur in future. Another differentiating factor is that India is considerably a Long Term Oriented society, and organizations are visionary in their approach. In the preparation of our report, Mirchevskis (2012) literature on how privatization impacts the management styles and the business objectives was what we first studied. Since, the conflict situations that arose at HBL were largely as a result of privatization in 2002, it was important to study how privatization contributes to conflicts. Mirchevski (2012) has highlighted that one of the most important factors that lead to conflicts in post privatization stages is lack of communication. As noted in our findings, there was no proper communication channel adopted by HBL. Mostly, these channels were informal, and therefore every individual looked at things differently and interpreted the message on his own. Another deduction that we made was that due to high power distance (PDI 55), managements in Pakistan adopt a more authoritative approach rather than fostering an open communication environment. With changing management practices all around the world and the need to acknowledge the increasing impacts of globalization together with appreciating diversity in the workplace, managements in Pakistani organizations have taken initiatives to adjust themselves according to the need of time. Pakistans organizational structure for the most part has been bureaucratic in nature, whereby superior subordinate distance were always maintained, job insecurity among the lower workforce prevailed and boss is always right approach was something which drove the Pakistani economy for long. However, in the last couple of decades, the trend has taken a different route whereby the organizational culture has moved towards one which is considerably more open and looks to accommodate the individual needs as well. However, these changes have been subject to several conflict situations which arose, and in their study conducted on the conflict management situations at PTCL, Chaudry, Sajjad and Khan (2011) found out that since Pakistani culture is such where people avoid confronting directly (High Context Society), therefore most of the conflicts at PTCL remained largely unheard. Also, on occasions where conflict situations were actually put forward before the management, the course of action was more of a coercive approach which the management adopted. Such a conflict resolution

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strategy adversely impacted the organizational performance for long and employee productivity was compromised significantly. Similarly in his study Mukhtar (2012) integrated the results of conflict management strategies in the Academia, Banking and Industrial Sector of Pakistan. The research centered around the meta model presented by Rahim in 2002, which said that there are five basic ways of approaching a conflict. These included Integrating, Obliging, Dominating, Avoiding and Compromising. When surveyed, 75% of the respondents suggested that the conflict management strategies that are used within their sector is Avoiding and compromising. When further read upon, it was found out that it is usually the lower management levels that compromise, however in most of the cases avoiding is what the organizations usually address a conflict with. This could be linked to our findings of HBL where we found out that in most cases the management took the upper hand and due to the prevailing job insecurity, the lower management levels would compromise. However, as we shall recommend in the next section of our report, there is an inherent need to look for a win-win situation when resolving conflicts, which shall require a different route to resolving conflicts altogether. Ahmed, Shaukat and Usman (2010) talked about how personality impacts the conflict handling style. Most of the managers at HBL have years of industry experience and perhaps are not well accustomed to the new work environment that businesses must move towards. Consequently, they tend to maintain a certain level of distance, avoid direct communication and also on instances have been seen to have a blue eyed person within the department. This on instance has further contributed to employee resentment. Therefore, the mind set which is required to addressing a conflict situation lacks within the top management at HBL, mostly due to the fact that they are not accustomed to listening the other side of the story. This we believe, needs to be addressed at the earliest, for which training and development, educating them of changing work environment and encouraging a stronger communication network is the need of time at HBL. In another study by Rashid, Murtaza, Habib and Toheed (2012) we concluded that in contemporary times when a team culture is an absolute necessity, conflicts tend to have devastating impacts. Within a team, every individual has a different approach therefore, managements must look to address each individual and then formulate a single strategy that incorporates every individuals point of view. In this regard, the leadership plays a dominant role and must realize the due role. Better team cohesiveness leads to increased productivity, and in Pakistani culture it must be kept in mind that there is a high tendency of group formulation within a single team which could severely hamper organizational growth in the long run and give rise to further conflicts. Conflicts have certain costs associated to them. Riaz and Junaid (2011) found out that mostly, the costs that an organization has to bear as a result of conflict are reduced employee productivity and morale. This was evident in HBLs case where employees after the privatization felt disconnected with the organization and were uncertain of their future with the organization.

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Stress levels within workers increased and with stiff competition that surrounds the Banking Sector in Pakistan, mergers and acquisitions had increased considerably after 2002. This further added to the job insecurity which was already quite high within the lower workforce and after years of service that they had provided to the organization, layoffs were seen as a price which they had to pay for their unconditional loyalty towards the organization. While this was what the lower management thought, the higher management was of the opinion that such steps are likely to increase competition within the workforce which would bring the best out of the workers.

RECOMMENDATIONS
In contemporary workplace, conflicts have become almost inevitable. The growing impact that globalization has had together with advancements in the field of technology has to an extent modified the way people approach a certain issue, an idea, or even a problem at hand. All these when combined form the basis of conflict within an organization, however, more than eliminating the conflicts altogether, constant efforts must be directed towards extracting a positive value out of them. Therefore, it is critical for HBL to regularly visit the organizational policies in order to formulate a well developed conflict resolution procedure, by virtue of which it shall help in fostering a positive work environment within the organization, build healthy relationships and shall channelize a positive energy across the organization. Considering, a collectivist society that Pakistan typically is, the employee productivity is closely linked to the relationships that people maintain with one another, both within and outside the organization. Conflict resolution is not only important from employee productivity standpoint, but also is critical in terms of holding a good repute within the ever increasing competitive Banking Sector in Pakistan. To best address and develop a conflict resolution approach, we have outlined the following recommendations; Every Stakeholder must be taken aboard To get a positive outcome from a potential conflict situation, it is vital to have every stakeholder within the organization on the same wavelength. This brings us to the importance of having a strong communication network within the company. As previously discussed, Pakistans cultural setting is such where there is high power distance (PDI 55) and is a collectivist society (IDV 14). What this means is that managements on several instances tend to ignore the lower levels of management and their voice goes unheard. While this happens at one end of the spectrum, at the other end, due to a collectivist nature that is present within the workers, the lower levels of management get together and practice informal communication channels, through which rumors gain momentum and employee productivity is severely compromised. The combination of two, ultimately would lead the larger interest of HBL to suffer, hence, first and foremost, efforts should be made to involve every member of the organization in the communication process.

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A broad system that can accommodate various conflicts It is possible that the nature of the conflict may differ, including personal, workplace or any other major conflict that stems within the company. A proper conflict resolution procedure must account for every type of conflict and a proper channel should be outlined that shall assist in the conflict resolution process. Work towards a win-win situation Broadly speaking, every individual is success driven. There is a constant desire to achieve something and even in case of Pakistan, there is considerable Masculinity that prevails (MAS 50). The situation is no Results different in case of Negotiation conflict resolution; therefore HBLs PreNegotiation management should work Stage the conflict in a win-win Conflict situation for the actors Situation involved. Through this, both the parties would feel motivated and rejuvenated rather than resentment creeping within the workforce. For this, we propose that every conflict should first be addressed by a pre-negotiation stage where the actual root cause behind the conflict or the problem at hand be understood. Ideally speaking, if a solution could be found at this stage is best suited; otherwise the conflict should be taken into the negotiation stage. Line Managers should be trained along conflict resolution lines Line managers would have a vital role to play in conflict resolution. Since, the level of interaction is most among the workers of the same department, the line mangers would be the best judge and mediator in such a situation. However, it is equally important that the line manger himself possess adequate skills to resolve the conflict, amicably and to the best of the organizations interest. Educating workforce and working towards conflict resolution should be continuous As the organization grows bigger and with changing times, the onus lies on the management to ensure that it follows the trend and updates itself along the way. The need to do this, suggests that both the workforce as well as the management at HBL must monitor the dispute resolution strategies carefully and incorporate any new policy measures that are necessary for the effective

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functioning of the organization. Failure to do so could result in a gap between the approach that is adopted by the employees and that of the organization, thus further worsening the conflict matters. Eliminating Bureaucracy Gone are the days when an autocratic management style could work in the best interest of the organization. The new recruits join the organization with a different mindset altogether and organizations all around the world and even in the Pakistani context are moving towards a more empowered workforce. Moreover, now that HBL is a private sector entity, the consumer expectations have changed for the better which shall require quick decision making, innovative service offerings and a more motivated workforce to ensure superior customer service. All this seeks a more empowered organization. Although the Hofstedes score in case of uncertainty avoidance for Pakistan is 70, it should be kept in mind that the Pakistani environment has become a lot more acceptable towards risk which is evident from increasing participation in the financial markets as well. Furthermore, this need is coupled with the stiff competition that organizations face; therefore they need to innovate continuously to match consumers expectations. Account for other conflicts and learn from existing ones Learning from conflicts, predominantly speaking is crucial. All the conflicts that occur should be documented and their results be shared with the employees. This would foster a learning environment within HBL which would help prevent conflicts in the future and at the same time provide a guidance to mitigate the ones that occur. Similarly, while a conflict resolution is under process, possibilities of other conflicts must not be rejected outright. A new conflict may emerge from an existing one, hence openness to such scenarios should be shown by the HBL management and efforts be made to resolve them effectively.

Conclusion
Little could be debated about the fact that conflicts are an inherent part of workplace environment. The basic objective behind conflict resolution must be to extract a positive learning out of it, whereby employees actually feel motivated about the conflict resolution and apply that learning in times to come. Currently, HBL lacks a proper conflict resolution mechanism and this needs to be brought in line with the changing management dynamics. In contemporary, organizations workers are empowered and an open communication culture needs to be fostered at all levels. In the light of recommendations that have been made, the communication culture at HBL needs to be revisited and there exists a need to share information with the lower level management as well. As of now, there is considerable ambiguity and lack of clarity of purpose and goals whereby the workers are only encouraged towards adopting a day to day approach

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rather than achieving a long term growth. Conclusively, the gap between the top and the lower level management has to be reduced to avoid conflict situations and employees must be encouraged towards building an environment which is motivated towards a single organizational goal.

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Contributions
Ghania Shaikh
For the literature review I researched on Intragroup conflict and its impact on employee performance in the banking sector. Analyzed the information gathered through the interviews to prepare a report linking the outcome of the secondary research to the interview findings. Also covered the introduction, organizational research and banking sector research of the report. I attended all the meetings pertinent to this report. Maria Abdul Razzak For the annotated bibliography, read four research articles and adopted the model from the research papers to apply on HBL. After reading them, I was involved in the analysis and recommendations process. Furthermore, attended all the meetings conducted for research purpose.

Syed Raza Hassan

As part of our term report I interviewed Ms. Hina Saqib and Mr. Muhammad Arshad, HR Executives at HBL. I made transcripts of the interview which then formed the basis of the research findings and analysis. Also, I contributed in putting together the literature review which was critical to the analysis of the report. Syed Salman Rizvi Apart from the interviewing process, my primary responsibility in the report was to put together the findings which we gathered during our interview process. The literature review that I did in preparation of annotated bibliography came in handy as I was able to better understand the conflict problems that HBL came across in the post privatization stage. I also made valid deductions by integrating the findings (problems of conflict resolution at HBL) with different cultural theories which we have studied in our course. Syed Sameer Hasan I was entrusted with the task of conducting a detailed analysis into the findings which we gathered through interviews. For this purpose, I read up on the literature reviews and developed a link between the class discussions that we have had over the Pakistani culture, Hofstede and Trompenaar cultural aspects followed by several recommendations, which if implemented would help HBL adopt a better approach towards conflict resolution in general, thereby ensuring employee productivity and organizational growth. Moreover, like my other group members I was present in the interview meetings that we conducted.

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Bibliography
Rashid, S., Murtaza, G., Habib, A., & Toheed, H. (2012). Effect of Conflict Handling Approaches on Team Performance: A Study on Higher Educational Institutes of Pakistan. European Journal of Business and Management. 4(12), 96-100. Riaz, M. K., & Junaid, F. A. (2011). Types, Sources, Costs and Consequences of Workplace Conflict. Asian Journal of Management Research, 600-611. Lather, A. S., Jain, S., & Shukla, A. D. (2010). Cross Cultural Conflict Resolution Styles: An Extensive Literature Review. Asian Journal of Management Research, 130-146. Afzal, H., Butt, B. Z., Rehman, K., & Safwan, N. An Investigation of Intragroup Conflict and its Impact on Employee Performance in Pakistani Banking Sector. South Asian Journal of Management, 16(1), 93-101. Kaur, H. (2009). Conflicts in Organizations: Causes and Management. University Business School, Punjab University, Chandigarh. Ahmed, I., Nawaz, M. M., Shaukat, M. Z., & Usman, A. (October 2010). Personality Does Affect Conflict Handling Style: Study of Future Managers. International Journal of Trade, Economics and Finance, 268270. Bashir, U., & Ramay, M. I. (May 2010). Impact of Stress on Employees Job Performance - A Study on Banking Sector of Pakistan. International Journal of Marketing Studies, 122-126. Chaudry, A. A., Sajjad, M., & Khan, I. (May 2011) . Employees conflict management strategies and demography: A case of Pakistan. African Journal of Business Management. 5(9), 3549-3555. Nouman, M., Khan, I., & Khan, F. (September 2011). Conflicts and Strategies for their Resolution: A Case of Organizations Operating in Khyber Pakhtunkhwa, Pakistan. Interdisciplinary Journal Of Contemporary Research In Business, 3(5), 618-633. Ullah, M. A., & Naeem, D. H. (January 2012). Job Stress as a result of Interpersonal Conflict An Empirical Evidence from the Banking Sector of Pakistan. Interdisciplinary Journal of Contemporary Research Business, 90-95.

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Mukhtar, U. (May 2012). Identification of frequent use of Conflict Management Styles in Pakistan Academia, Banking & Industrial Sector. International Journal of Business and Behavioral Sciences. 2(5), 41-51.

Mirchevski, M. (December 2012). The Impact of Privatization on the Management Process . Business Management and Strategy, 23-35.

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Appendix
Findings from the interview with Ms. Hina Saqib and Mr. Muhammad Arshad:
1. What kinds of conflicts do you usually face in HBL? Conflicts vary in nature from bank to bank and industry to industry. Not all conflicts can be managed the same way; each situation is unique Sources of conflict range from a difference of opinion, difficult working conditions, or unrealistic work expectations through to discriminatory behavior such as racism or sexism, poor communication, or non-compliance with organizational norms or values. What is important is to analyze the source of conflict and use it to avoid future conflicts. Conflicts can occur between individuals owing to HBL's diverse workforce; culture, religion, political views etc. Conflicts can occur between 2 or more groups of people; can occur in large and small organizations and be healthy or destructive. Conflicts within groups occur due to individual differences mentioned earlier. It is important to be aware of such group dynamics that can lead to possible conflicts.

2. Which department handles conflicts at HBL? Do you have a Conflict and Dispute Resolutions Department? No specific Conflict Resolution Department. HR Department and Disciplinary Department manages conflict resolution. There is no need for a specialist department for this function.

3. What is the most important element you consider to mitigate or eliminate conflict? Feedback is very important. If we can develop a good system where we get timely feedback from our employees, conflicts can be reduced. Feedback is internal and external

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A Marketing Director eagerly recognizes that client feedback is a better indicator of her performance than close ratios and costs-per-lead Internal feedback is just as important as external feedback, and sometimes harder to get. HBL is trying to implement a system to extract feedback and then develop programs for professional development. HBL lacked such systems in the past and suffered as a result

4. What is the most critical issue and the resulting conflict HBL is facing? Overstaffing was a huge concern for the new management. Overstaffing leads to inefficiency; the work of one person is done by many; extra resources are spent. Overstaffing can lead to de motivation This lead to downsizing which led to a huge conflict in HBL. Other organizations that suffer because of overstaffing include PIA etc.

5. Negotiation Process: Official negotiations are done at HBL. Depending upon the situation and time, the way the negotiations are to be conducted differs. The skills of negotiations depend and differ widely from one situation to the other. Negotiation process takes one month at HBL. It is at times beneficial in the organizations in order to resolve conflicts.

6. Mediation Process: Mediation after negotiation: o Mediation takes place after negotiation, if employees resist accepting new terms and sticking to two or three points. o This takes place when employees and groups are not at all ready to accept the decisions of the management and they call for strikes, threats etc. 7. Do you have a formal arbitration procedure given the judicial situation of Pakistan?

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Arbitration did not exist with this particular name at HBL but do work with this unorganized way. The appointment of an independent person to act as an adjudicator (or judge) in a dispute, to decide on the terms of a settlement. Both parties in a conflict have to agree about who the arbitrator should be, and that the decision of the arbitrator will be binding on them all. Arbitration differs from mediation and negotiation in that it does not promote the continuation of collective bargaining: the arbitrator listens to and investigates the demands and counter-demands and takes over the role of decision-maker. People or organizations can agree on having either a single arbitrator or a panel of arbitrators whom they respect and whose decision they will accept as final, in order to resolve the conflict. Arbitrator is a legal person and his decision will be followed by both employees and management.

8. What other conflicts do you face at HBL? Pay raise issues mostly create conflicts When bonuses, rewards are not given at proper time and in proper amount. These kinds of problems also rise because of the inflation Transactional activities cause day to day meager conflicts. They are policy driven Transformational activities lead to major structural and cultural changes and larger conflicts. Downsizing: o In 1997, 29000 employees were working at HBL which were downsized to 13000; the case is in litigation now. o In organization they have complex and heterogeneous structure. o In these cases HBL has no issues or problems because a certain amount goes to the companys lawyer every month, and he handles the case. o But the people involved or individuals seek difficulties because lawyers fees are expensive and they cant afford these fees for too long.

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Re-entrenchment: o Employees were given special bonuses and other incentives to leave HBL and seek employment elsewhere. o Re-entrenchment allowed for cost savings o Lower level staff was grossly over paid

Employees expectations from management: o HBL employees perceived that it is their right that their child / children (in some cases) get employed at HBL o HBL after privatization, started hiring skilled employees to satisfy the companys as well as stake holders expectations. o This angered some older employees. o Increased credibility and overall performance recently.

Outsourcing of Employees: o Employees such as peons, guards, and drivers were outsourced from another company. o This is because in order to avoid conflicts in a way that nor there will be a similar staff nor there will be groups, and there will be least probability of conflicts arising.

Employees hired at temporary work basis: o At HBL there are no permanent operational employees hired instead they all are hired on a temporary basis contracts.

Role of Work Councils: o Personality conflict chewing pan, talking loud on cell phone, Negative attitude of employees are monitored by these councils. o Most of the time employees did this on purpose to give an impression that they are more powerful than the management. o These conflicts at HBL have also rise, such as not following the dress coat, negative attitude or any practice against the terms mentioned in the code of conduct.

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o Accountability or check the dress code and other matters at regular intervals is necessary in any organization.

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NEWS CLIPPINGS

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