Documente Academic
Documente Profesional
Documente Cultură
n Issue at
PTCL
Harmonizatio
n of Various
Packages
PCM Term Report MBA
2015
Submitted by: Faisal Ahmad Jafri 05835
Contents
I.
Executive Summary................................................................................................... 3
Etisalats Challenge........................................................................................... 16
Voluntary Separation Scheme............................................................................ 17
1|Page
A Step Closer................................................................................................... 19
2.5
Impact On PTCL............................................................................................... 19
3.3
3.4
3.5
4.3
2|Page
I.
Executive Summary
The current employment package has been created to harmonize the BPS (govt based pay-scale)
to new terms and conditions enforced by Etisalat.
Organizations prime focus is basically to reduce and ultimately end the number of BPS and NCPG
employees by either transferring them to NTC package or offering them third party contracts. There
is clearly no roadmap for job analysis leading to job sizing. There is a constant pressure on
employees to adopt NTC employment package and smart tactics are adopted by management from
time to time to increase the adaptation rate of this scheme.
Considering the issues faced by PTCL vis--vis multiple employment categories and compensation
packages, findings and recommendations regarding the overhaul and complete redesigning of the
organization is presented along with an action plan.
3|Page
PTCL has laid Optical Fibre Access Network in the major metropolitan centers of Pakistan and
local loop services have started to be modernized and upgraded from copper to an optical
network. On the Long Distance and International infrastructure side, the capacity of two SEAME-WE submarine cable is being expanded to meet the increasing demand of International
traffic.
1.3 History
From the beginning of Posts & Telegraph Department in 1947 and establishment of Pakistan
Telephone & Telegraph Department in 1962, PTCL has been a major player in
telecommunication in Pakistan. Pakistan Telecommunication Corporation (PTC) took over
operations and functions from Pakistan Telephone and Telegraph Department under Pakistan
Telecommunication Corporation Act 1991. This coincided with the Government's competitive
policy, encouraging private sector participation and resulting in award of licenses for cellular,
card-operated pay-phones, paging and, lately, data communication services.
Pursuing a progressive policy, the Government in 1991, announced its plans to privatize PTCL,
and in 1994 issued six million vouchers exchangeable into 600 million shares of the would-be
PTCL in two separate placements. Each had a par value of Rs. 10 per share. These vouchers were
converted into PTCL shares in mid-1996.
In 1995, Pakistan Telecommunication (Reorganization) Ordinance formed the basis for PTCL
monopoly over basic telephony in the country. The provisions of the Ordinance were lent
permanence in October 1996 through Pakistan Telecommunication (Reorganization) Act. The
same year, Pakistan Telecommunication Company Limited was formed and listed on all stock
exchanges of Pakistan
PTCL launched its mobile and data services subsidiaries in 2001 by the name of Ufone and
PakNet respectively. None of the brands made it to the top slots in the respective competitions.
Lately, however, Ufone had increased its market share in the cellular sector. The PakNet brand
has effectively dissolved over the period of time. Recent DSL services launched by PTCL reflect
this by the introduction of a new brand name and operation of the service being directly
supervised by PTCL.
The post-monopoly era came with Pakistans Liberalization in Telecommunication in January
2003. On the Government level, a comprehensive liberalization policy for telecoms sector was
made in the offering. In 2005, Government of Pakistan decided to sell 26 percent of this
company to some private corporation. There were three participants in the bet for privatization of
PTCL. Etisalat, a Abu Dhabi based company was able to get the shares with a large margin in the
bet. Government's plan of privatizing the corporation was not welcomed in all circles;
countrywide protests and strikes were held by PTCL workers.
5|Page
12%
26%
Etis alat
General Public
62%
Pakistan Telecommunication (Re-organization) Act, 1996 replaced Civil servants Act for PTCL
in 1996 and it became applicable on all employment categories.
7|Page
As per old employment structure at PTCL before privatization there were two main categories,
namely; Daily wagers and Regular Govt. employees. BPS grade 17 and above employees were
inducted through CSS and follow the same bureaucratic protocols as of any other government
organization in Pakistan.
BPS 1-16 grade employees were inducted through different placement programs time to time and
follow regular government pay-grade structure. Whereas, daily wagers were contractual labor
hired for different projects, paid on monthly basis but not entitle for any benefits like any other
regular employees.
Etisalat took over PTCLs management in 2006 with 72,000 employees across Pakistan. PTCL is
one of those high potential public sector organizations which were generating profits after being
so overcrowded. Restructuring and right sizing of the organization were the main challenges for
the new Etisalat Management.
So right after takeover Etisalat initiated a study/survey through renowned consultants to identify
the gaps and right potential of the organization. They revealed that PTCL is highly overcrowded
and must lay off 80% current workforce in order to get the desired objectives. The new PTCL
management decided to restructure employment categories and to introduce Voluntary
Separation Schemes for all categories except daily wagers.
1.6.1 Centralization
The operations of PTCL were highly centralized. Even if a customer wants an action on his
complain, no lower management staff can fulfill his request without the proper approval of his
senior manager. The senior manager usually is a top-level manager. Thus, even a basic task is
dependent for approvals. The decision making power was not for everyone.
marketing head came to know the problem. Then the marketing head used to convey this
problem to I.T head who then transferred orders to downward chain of management. Due to this
long chain of command, a single task sometimes took days to complete.
1.6.4 Formalization
Simple task like getting a new connection was tedious at that time. Filling out numerous forms,
collecting demand notes, attestation from several grade officers were some of the basic
requirements of every task. Formalization was rich in PTCL.
1.7.1 Decentralization
9|Page
Although Government of Pakistan still holds a majority share in PTCL, but the new leadership
has opted to decentralize the operations to a greater extent in comparison to the previous
structure. The new management decentralized certain decision to regional/exchange level, such
as, DSL link approving authority of another ISP, Tower usage permission by other ISPs, approval
of new connections, lesser documentation.
regions: North, Central and South, as depicted in the figure in the next page. Blue colored region
shows South, green colored region shows Central and yellow colored region shows North region.
Sub regions are also labelled.
11 | P a g e
12 | P a g e
13 | P a g e
14 | P a g e
organizational culture in Pakistan. Instead of building the company strength, capability and
making it more competitive in global market, the company was ambiguously sold. A number of
potentially unnecessary concessions were also made to PTCL during this process. The
privatization of PTCL was also exempted from purview of Public Procurement regulatory
Authority Ordinance 2002 in the federal budget. With this major constitutional concession, the
Etisalat was given free hand for selling and purchasing of assets. It was able to acquire PTCL in
five year easy installments. The government was also asked to pay 50% of the layoff charges
regarding the employees voluntary separation program and Etisalat received $50 million as
technical assistance fees for providing management services and expertise.
Employees generally believed that PTCL is incurring huge profits and would continue to do so.
New management had a realization that PTCL could only sustain its position if it adapts to latest
technical practices. Employees at the same time lacked the required qualification and motivation
towards learning, thus looking at new practices as a threat to their jobs.
Keeping all the factors in mind, company had to come up with a process to release unnecessary
workforce. Privatization encompasses a wide range of social consequences and a growing
concern over the negative repercussions of privatization has spawned research worldwide. The
effects of privatization on the employees, employers, industries and the society in general are
wide ranging. The effective policy prescriptions are essential in the whole privatization process.
Therefore, PTCL came up with a Voluntary Separation Scheme for its redundant workforce.
EOBI benefits.
Addition of training period to the LOS.
PTCL accomodation for 6 months.
18 | P a g e
Transition compensation
Benefits compensation
Supplementary benefits
Optee Support Program
The transition compensation is valid on all regular and NCPG employees; transition bonus has
two rewards, based on time limit i.e Rs 200,000 as an early bird bonus and Rs 150,000 as regular
program bonus. All the calculations are based on Incremented Basic Pay/Emoluments/Gross Pay
i.e Pays & Allowances as of December 2014 Payroll
19 | P a g e
VSS includes benefit of 2 year of relaxation to pension eligibility and enhanced gross pension
due to the employees length of service. The retirement benefit for employees greater than and
less than 18 years differs as per different options.
2.5Impact On PTCL
Due to this drastic transformation in the way of doing business and ethics, PTCL is in state of
flux and strategic drift. The management is trying hard to separate the unwanted and/or
redundant workforce and bring the rest on to the new employment categories offered by Etisalat.
However, they cannot fire them as per privatization deal. So there are multiple categories present
in the organization which disrupts the decorum of HR policies and standardization.
It appears also that the companys whole focus right now is to settle in after the privatization
deal. Some restructuring has been done as per McKinseys instructions but the stress is on opting
the new employment package rather than job analysis and job sizing.
The biggest issue company is facing that as they are still away from their target of rationalizing
headcount. The deadwood of the company is not opting for the new employment packages.
PTCL is using smart tactics to identify and isolate the unwanted employees such internal
transfers to remote and out of comfort zone locations, unexpected promotions and expose of nonperformers, delay tactics e.g., for leaves, demotivation tools, e.g. no increments, difference in
treatment of committed vs non-committed employees, motivation tactics & retention policy in
parallel viz. international assignments & secondments, increments and incentive and right use of
power and influence tools. However, from HRs point of view these tactics are highly disputed
and puts in question the overall commitment of PTCL to its corporate goals and core values.
If PTCL continues to carry on with these tactics, the polarization and demotivation in the
employees is expected to increase further and it would not give any fruition to PTCLs plan of
introducing modern corporate governance.
20 | P a g e
Open ended contracts (NTC)-Newly Hired Etisalat employees such as President, Senior
Executive Vice President, Executive Vice President, General Manager, Sr. Manager,
Manager, Asst. Manager/Specialist and Management Trainee
Regular ( Govt. employees)
Non-Management can be Regular i.e BPS or NCPG
Outsourced staff (Third-party staff; HRSG, Esquare)
Secondees (PTCL employees working on secondments in different countries; e.g.
ROSHAN Telecom Afghanistan)
During the course of this report, our focus will be on VSS, NTC and BPS employment category
as the percentage of remaining is negligible.
1.
2.
3.
4.
Transition compensation
Benefits compensation
Supplementary benefits
Optee Support Program
The transition compensation is valid on all regular and NCPG employees; transition bonus has
two rewards, based on time limit i.e Rs 200,000 as an early bird bonus and Rs 150,000 as regular
program bonus. All the calculations are based on Incremented Basic Pay/Emoluments/Gross Pay
i.e Pays & Allowances as of December 2014 Payroll
22 | P a g e
VSS includes benefit of 2 year of relaxation to pension eligibility and enhanced gross pension
due to the employees length of service. The retirement benefit for employees greater than and
less than 18 years differs as per following options.
Gratuity is only applicable to NCPG employees, while the health fund includes both NCPG and
regular employees according to the employees length of service
23 | P a g e
Leave encashment is applicable to both NCPG and regular employees but the cash amount
formula varies for both.
Supplementary benefits of Loan write-offs and minimum package amount apply to both Regular
and NCPG employees.
24 | P a g e
Grades
Nature of Job
Grade-17 to Grade-22
Grade-10 to Grade-16
Grade-5 to Grade-9
Grade 1 to Grade 4
Labor workers
Pay emoluments, allowances, pensions and all perks and privileges of government
serving/retired servants not only vary with the status, rank, appointment and service but also with
their affiliated services. For example: - An officer holding the appointment of additional
secretary in Federal Government is of grade 21. However, the appointment when being held by
incumbent in Provincial Government will of grade 19. So, appointments also vary in scale
depending on the affiliated services of individual.
Minimum Pay, Maximum Pay, Annual Increments and all other allowances etc. are in Pakistani
Rupees. Civil servants are also entitled various other allowances (as per their
department/organization rules and their service terms) along with their basic pay, as a part of
their Gross Pay. These allowances may include Ad hoc Relief Allowance (ARA), Medical
Allowance, Special Pay, Conveyance Allowance, House Rent allowance and several other
miscellaneous allowances, which are applicable. Government also pays pensions to its retired
employees. All services are organized in hierarchical order and officials serving therein are
categorized in various grades/ranks/brackets/groups for the sake of smooth, transparent and
meticulous execution of task and are paid accordingly. Table on the next page describes the total
remuneration offered by the government of Pakistan for various job grades.
25 | P a g e
However, to discourage employees on the BPS scale and to force them to move to NTC scale,
the BPS guidelines are not fully followed. In 2014, bonus and pay raise was achieved by PTCL
employees after strikes and protests. The charter of demands presented by the workers to the
management consisted of 5 demands to which PTCL management finally conceded too.
1. Increase of 20% in the salaries as announced by the Govt. of Pakistan in Budget 2009
2. Convenience allowance
3. Eid Allowance
4. Rest and Recreation Allowance
5. Up gradations
It merits mentioning here that bonus and pay raise is achieved by PTCL employees after strikes
and protests which were pending since 2009. In March 2015 PTCL also announced a bonus but it
26 | P a g e
was not uniform within the different employment categories. Increment and bonus internal memo
are provided at the end of this chapter as reference.
Old Grade
New Designation
Total Remuneration
BPS-17
Assistant Manager
Rs 30,000 - 70,0000
BPS-18
Manager
Rs 65,000 - 110,000
BPS-19
Senior Manager
Rs 100,000 - Rs 225,000
BPS-20
Gen Manager
Rs 220,000 - Rs 360,000
BPS-21
Rs 350,000 - Rs 650,000
BPS-22
President
Rs 650,000 onwards
27 | P a g e
Pr
es
id
enand
SVPs
t
VPS
G eneral M anagers
M anagers
Assistant M anagers
Current New Hierarchy in PTCL
28 | P a g e
29 | P a g e
30 | P a g e
31 | P a g e
backbone)
PTCL has achieved economies of scale in its Fixed Line segment, due to a longer
experience curve.
Widest and strongest coverage of Fixed, WLL and Broadband services throughout
Pakistan.
PTCL is one of only few competitors to provide Long-haul Fiber Solution in
Pakistan.
Huge sources of Cash Flow and Re-investments.
PTCL carriers a significant portfolio of businesses, with Fixed Telephony as a Cash
Cow, WLL in the position of Question Mark, and Ufone GSM being a Star business.
32 | P a g e
4.1.2 Weakness
support
Over employment & low productivity
Sluggish decision making including external interferences
Corporate culture akin to government departments
Poor focus on a high-potential corporate broadband market
4.1.3 Opportunities
benefit
High Potential in corporate broadband market
Introduction of IT education in rural areas of Pakistan, esp. Punjab & Sindh
4.1.4 Threats
business
Increasingly changing preference of GSM/Wireless telephony over Fixed Local Loop
Ability to attract & retain quality professionals by competitors such as, Mobilink and
Telenor
Entrance of competitors like Transworld in the IPLC and IP Bandwidth business,
package but the real change which should be in the minds & hearts and in the operational
practices has not been adopted. PTCLs current Chief HR Officer is in the organization since
1987. However, some of the departmental heads are new hirings as well which add to the color
of the organization. Also, at times management decisions regarding change management are
delayed due to legal bindings of the privatization deal.
Without any iota of doubt, we see a clear disinterest of employees in the affairs of the
organization. Large number of political hiring and little link of reward to performance can be
clearly attributed as the reasons behind this cause. As the company was nationalized previously,
the general mindset is of satisfaction with the status quo which develops no little focus of
employees on companys strategic direction leading to poor asset sweating as well. Competency
based hiring were not done, vision and mission is not embedded in the employees and there is a
great demotivation in employees and due to different employment categories, silos are also
observed within the work force as well.
On the next previous page, a model for effective HR strategy formulation and implementation is
given. The four elements of the model are organizational strategies, environment, organizational
characteristics and organizational capabilities. All these elements are linked together via a
consistency chain to form an HR strategy. Unfortunately the consistency factor is missing in
PTCL. Organizational strategy is not clear; the only focus is on to rationalize the head count. The
environment is daunting; there is uncertainty and ambiguity within the employees. Culture and
organizational characteristics are not uniform, in the corporate head offices we see modern
35 | P a g e
culture but in the regional exchanges etc the same governmental bureaucratic style is still
observed.
negative because public enterprises were overstaffed and on privatization employees, feel job
insecurity and have fear losing their jobs. In majority of privatization cases workers lost their
jobs after privatization, but in cases where employees lost their jobs as a result of privatization,
such employees tended to receive generous severance. Overall point is that there can be no
simple prediction about the distributional effects of privatization; the impact depends on at least
three factors: initial conditions, the sale event, and the post-privatization political and economic
environments.
Employer/Organizational Objectives:
Employer/Organizational Objectives are not clear. Organizations focus remain on
rationalizing headcount and removing all BPS scale employees. Corporate strategy exists
but is not followed whole heartedly. Organizational goals regarding performance and
KPIs do not seem to be fully cascaded down for an integrated performance.
Organizational Structure:
Organizational Structure has been redesigned a bit, but still a large number of layers and
structure exist. This impacts the overall performance. The organizational structure is not
much different than the legacy structure and is strictly hierarchical. It does not carry a
flatter structure which is a hallmark of modern IT and tech related organization.
37 | P a g e
5.2 Recommendations
The prime reason for the focus on adaptation rate of this NTC package (or VSS) is that as long as
the employees are on BPS category, PTCL cannot separate them as per the privatization
agreement with the Government of Pakistan. Therefore, for PTCL, reducing the number of
subsidized workers is the most important issue rather than developing an equitable job grade/pay
structure. The company wants to manage only management level employees (equivalent to grade
17 and above) and will outsource all non-management functions to reduce its overheads.
As currently due to agreement limitations they cannot change employment package of any
employee who was on BPS scale before privatization, therefore, the organization cannot bring
about any real change with regards to compensation and benefits packages. Also, so far, no HR
philosophy is built regarded to pay package percentile. Therefore, no comment can be given
external equity maintenance in the organization. Internal equity is tried to be maintained via
following the new NTC job grades. Once all the employees adopt NTC package, then the
organization is in a position to do job sizing and job analysis so that people may be moved,
rotated, shifted or even separated as per business needs.
The Chief HR Officer at PTCL is Mr Syed Mazhar Hussain. He has been part of the organization
since 1987. His focus is currently on bringing employees on NTC employment package rather
than an overhaul reform.
The proposed solution for resolving all issues at PTCL lies in developing a complete new
structure, vision and philosophy for PTCL. There is a need to a vision, mission and core value
38 | P a g e
cycle at the PTCL. This should involve representatives from different cadres of the organization
including the management as well as a small share of non-management grade as well.
PTCL has to start from scratch; it has to establish its corporate goals by market forecast and
demand and supply situation in the marketplace. This can be achieved by doing a functional level
SWOT leading to a corporate level SWOT to decision of alternative alternatives. Strategy
sessions need to be conducted throughout organization. Once strategy is devised, then a structure
is needed, designed to achieve organizational plans.
Since departmental redesigned has been done already, we assume that it is done as per the
analysis of the external consultants. Therefore we suggest that now PTCL should perform a JD
and JS exercise for all positions needed, utilize organizations HR database to scan current
employee skillset.
PTCL should conduct and run a full fledge fresh recruitment plan in alignment with the
developed new organogram, as proposed by consultant. PTCL should use established job sizes
made by external consultants, decide pay philosophy as per owners and employees mutual
agreement, at this point in time. Followed by this step, PTCL needs to develop a pay structure
deciding the breakup of total remuneration and total reward model, manage external and internal
equity followed by individual equity exercise and identify talent into groups and develop
development or separation plans; as needed. PTCL then needs to make job grade structure and
TR packages public for transparency amongst the employees, to be available on organizations
intranet.
Once this is done, Individual job holders should to review their JDs as a continuous cycle now. If
they feel anything is missing and needs addition, they must inform their line manager who
should approve the same and inform HR. HR will then commensurate the JD with the JS and will
make necessary adjustments. This step will be a precursor to the process called salary adjustment
as now TR to be adjusted to meet external equity needs, as well as individual.
Annual increments and bonuses will be paid out as per organizational and individuals
performance. This will not be counted as salary adjustment. Unless the restructuring of pay
structure at PTCL is not done as per the flowchart explained below, PTCL will not be able to
solve its HR issues. This will impact overall productivity of the organization as well as the
employee morale. The maintenance of the equity will be an ongoing process, and will be run at
least once a year within the organization.
39 | P a g e
Establish corporate
goals and stratrgy
throught market
intelligence and SWOT
analysis
Develop organization's
structure and
department level goals
that are congruent to
achieve plans to
materialize strategy
Perform a JD and JS
exercise for all positions
needed, utilize
organzation's HR
database to scan
current employee
skillset
TR to be adjusted after
JS adjustment, process
known as salary
adjustment
41 | P a g e
Following action plan is suggested to the PTCL management to redesign their organization. Action plan
starts from 2016 and ends by end of 2016. Quarter wise time bound time lines with action items and
people responsible is presented.
42 | P a g e
II.
Appendix
Proposal approved by the instructor is attached at the back of this report.
43 | P a g e