The Human Resource Management of Al Rajhi Bank - Research Paper Example

? Human resource management: A case of Al Rajhi Bank number Human resource management: A case of Al Rajhi Bank Executive summary Human resource management has become the top concern for leading financial institution of the modern world. Commercial banks as well as the Islamic banks are focussed on managing their human resource since it allows the institutions to achieve good growth prospects in the long run. This paper presents a study of the human resource management practices of the leading bank Al Rajhi in Saudi Arabia. The study is made on secondary data. Qualitative analysis of the information collected leads to the inference that the bank has excellent human resource practices which is guided by a deliberate overlapping of the business initiatives with the employee training needs for the organizations. Recommendations have been made on the basis of this study. These are aimed at improving the bank’s performance in the future. Table of Contents 1.1 Background 5 Chapter 2: Literature Review 6 Chapter 3: Industry Profile 7 3.1 Human Resource Management (HRM) 7 3.2 HRM System 7 Chapter 4: Company outline 8 4.1 Introduction 8 4.2 About the organization 8 5.3 Divisions of operations 9 5.4 Vision and mission 9 Chapter 5: HRM practises of Al Rajhi bank 10 5.1 Introduction of the study 10 5.2 Objective and scope of study 10 5.3 Methodology 10 5.4 Limitation of the study 12 Chapter 6: Introduction to HR management 12 Chapter7: Employees Training and Development at Al Rajhi bank 13 7.1 Definition of Training 13 7.2 Phases of Training 13 7.3 Orientation program 14 7.4 Training approaches at Al Rajhi 14 7.5 Training issues and problems 14 Chapter8: SWOT analysis 14 Chapter 9: Training and development in other players 16 Chapter10: Analyze my general experience at Al Rajhi bank 17 Chapter 11: Recommendation 17 Chapter 12: Conclusions 17 Works cited 18 Appendix 20 Chapter 1: Introduction Islamic Banking practice has evolved during the 1970s. It is becoming popular over the last few years and despite the global financial and economic slowdown Islamic banking is showing annual growth rate in the range of 10 percent to 15 percent. In 2010, the Islamic finance institutions have grown at the rate of 25 percent. This sector is regulated by “the Sharia law of Fiqh al-Muamalat (rules of transactions)” (“Islamic Banking Trends - the Future of Arab Banking”). Employee training and development plays an important role in the banking sector in all the gulf countries. Level of involvement of the employees depend on two most important factors; personal characteristics of the employee as well as the culture in the organization. Training and development of the employees of the banks in the Saudi Arabia takes into account factors such as education and age of the employees and the rank held by them in the organization, tenure in the organizational and the pay received by them (AlKahtani 67-78). 1.1 Background Global The Al Rajhi bank is not only a big financial institution in the Saudi Arabia; it is the biggest Islamic bank in the whole world. It has significant influence in the country’s trade and commerce with the rest of the world. Hence, human resource of the bank casts notable impact on the business sphere at the global level. Continental The gulf region is closely knitted with the banks whose business practices are guided by the Islamic culture and religious beliefs. These banks are a part of the financial system of Saudi Arabia and have majorly contributed to the entire continent of Asia. Indeed, performance of these banks is currently considered as the measure of the economic health of the gulf region and also of Asia (Al-Dukheil 56). According to Al-Dukheil, the private sector is becoming increasingly important in the financial sector and contribution of these banks is set to increase further. National There is high Islamic awareness in the Kingdom of Saudi Arabia (At-Twaijri 11-16). This creates barriers for the organizations in adopting a generalist employee training manual. It affects activities of the banks. In the last decade, most of the large and medium sized banks have adopted automated system which also has necessitated extensive training for the staffs. Local Research shows that the banks in Saudi Arabia are mostly packed with expatriates at the low as well as high ranks. The local staff lacks the skill and banking experience required for running these banks. Sufficient data is not available regarding the availability of labor due to which appropriate labor related strategies are not developed (At-Twaijri 11-16). Chapter 2: Literature Review This section elaborates the existing literature on the banking system in the Saudi Arabian region and presents a comparative study of the pattern of training and development of these banks and the pattern followed by the Al Rajhi Bank. The issues that are central to the development and training needs of the human resource of the big banks in Saudi Arabia, including the Al Rajhi bank, focus on the following aspects; need for and purpose of training, analysis of the outcome and its evaluation, intensity of evaluation, instruments used for the analysis, timing and design followed for the process of analysis and evaluation. The procedure of need assessment is not only restricted to a single training, but relates to other aspects of the training functionalities, such as functions of training manager, working of the management, priority based training, extent of training requirement (number of employees to be trained) and availability of resources. Research shows that assessment of training needs is crucial for the analysis of performance of the organization and also analysis of the individual performance (Mirza and Riaz 142-155). Chapter 3: Industry Profile 3.1 Human Resource Management (HRM) Islamic Banks follow a separate set of rules that guide them in managing their human resources. These banks recruit employees and take care of employee promotion, transfer or termination according to the rules set by this Islamic banking law. In multinational banks in Saudi Arabia, human resource theory examines the validity of these processes in the national contexts that these organizations operate in (Harris, Brewster and Sparrow 129). These banks maintain a confidential report that presents an annual performance of an employee, which is used for performance evaluation and promotion of employees. Also based on these reports training need of the employee is decided. 3.2 HRM System Human resource planning (HRP) is the preliminary step towards developing a holistic HRM system. Human resource management in Islamic banking industry in Saudi Arabia includes three types of training; ideological, theoretical and practical. Major banking areas are general banking procedures, investment banking and foreign exchange. Therefore training programs are focused on these areas. Banks such as Al Jazira Bank and Al Baraka Bank impart training on customer service and audit (Storey 175). The training and development program commands considerable amount of resources which necessitates prior allocation via a budget plan (Aswathappa 110). Big institutions invest largely in employee training since this process ultimately rewards the company with more skilled and efficient employees (Goyal 95). Besides dealing with human resource acquisition, it also deals with employee counselling, human relations, compensation and benefits, training and development (Randhawa 23). Chapter 4: Company outline 4.1 Introduction This paper presents a study on human resource management by the Al Rajhi Bank. The outcomes of the evaluation would show training advisors ways to make better planning in future that would be more effective and time and cost saving. 4.2 About the organization The Al Rajhi Bank is one of the most influential banks in the world that follows the Islamic culture and religious beliefs and has been in the banking and financial sector for more than 50 years. It has a total asset worth SR 170 billion (which units US$ 45 billion) (“IST networks fortifies Al Rajhi bank’s industry leading customer care with Cisco contact center upgrade”). The Sharia law regulates this banking process and actively bridges the difference existing between the financial structure of the modern world and the intrinsic values rooted in the Islamic banking principles. It helps the bank to adjust with the modern industry standards and maintain its progress. Figure: Organization structure of the Al Rajhi bank (Source: Gup 169) 5.3 Divisions of operations The different divisions of the Al Rajhi Bank are similar to other banks, while the only point of difference for this bank is that it has a strong surveillance body. It oversees the operations of all the verticals within the organization. The bank strictly avoids interest based transaction of money. 5.4 Vision and mission The vision of Al Rajhi is to hold the position of a trusted leader and deliver innovative solutions to improve financial transactions and also enhance overall quality of living of the people. The mission of the bank is to become the “most successful bank admired for its innovative service, people, technology and Sharia compliant products, both locally and internationally” (“Vision, Mission and Values”). Chapter 5: HRM practises of Al Rajhi bank 5.1 Introduction of the study This study is aimed at researching the HRM practices in the Islamic banks with special reference to Al Rajhi. HRM is an important part of the management practices of the bank. 5.2 Objective and scope of study The objective of this research is to study the theoretical issues in HRM and identify the same in Al Rajhi bank. The outcome of this study provides the future scope of managing employee base in the bank more effectively and assessing employee performance so as to improve long term performance of the organization. 5.3 Methodology This research follows the interpretivist research philosophy. The research design follows the case study approach based on one bank in Saudi Arabia. It follows the mono method since the data has been collected for qualitative analysis. This is a cross sectional study. Throughout the study the researcher has followed rules of the company. The researcher has avoided commenting on sensitive issues or practices made by the bank. Any sensitive information related to the organization has not been used for this study. Data analysis Data has been collected from primary source through survey of employees of Al Rajhi and secondary sources, such as, books, journals, and internet sources like online websites and online PDFs. Extensive study of researches made by previous researchers has allowed the researcher to gain deep insights on the HRM practices of the bank. Quantitative analysis Data has been collected for analyzing the status of training and development department in Al Rajhi Bank. 95% of the respondents have revealed that the training program has met the expectation level of the employees. Every respondent has opined that they would be able to apply the knowledge gained from the training on real situations. The training objectives have been accomplished successfully. According to 90% of respondents, the trainer has been knowledgeable enough to respond to the queries of the trainees and has provided the instructions in a comprehensive way. 85% of the respondents have opined that they have been benefitted from the interactions with the trainer and the review period held after the training was over. Qualitative analysis The head of the training and development department has been interviewed for gathering information regarding the performance of the training and development programs in the company. The interview has been asked to elaborate on the exisiting training programs in the organization. From his response it has been revealed that the Al Rajhi bank puts emphasis on the knowledge base of the employees and their constant up-gradation. Training programs of the bank includes product based training, software training for the employees and customer handling training programs. However, the head of the department has also admitted that there are chances to improve the training programs. The main areas that require improvement are customer handling for the low income customers and make these training programs more related to the real life problems faced while making banking transactions. It has also been added by the department head that these training programs are conducted for short period of time. There are plans to design some long length training programs that would continue for four months to six months and might also be conducted in different phases. The framework of the current training programs have been designed keeping in mind the current industry standard. According to the department head, these training programs have been framed after making extensive research on the training programs conducted by other Islamic bank in the industry. The data has been analyzed using both qualitative and quantitative methods. Qualitative method has been utilized for evaluating the data gathered from secondary sources. Quantitative method has been used for analyzing the information collected from primary sources. 5.4 Limitation of the study This study has been made within a short period of time. The data collected for evaluation has been limited to secondary sources only. Chapter 6: Introduction to HR management Job analysis refers to the process in which the roles and responsibilities of a job are identified (Condrey 587). The attributes of the job refer to the activities involved in it. This is an important part of the human resource selection process in organizations. It requires matching the personal characteristics of prospective candidates with the work environment and the critical elements in the job (Gatewood, Field and Barrick 245). Employee testing and selection The Islamic banks follow the procedure of job analysis during employee selection and also while taking decisions related to performance appraisal. Al Rajhi conducts tests for the candidates (thorough tests, interviews and discussions) to gather information that would assist job analysis. This allows the interviewer to study sample behavior of the candidate (Pastorino and Doyle-Portillo 578). Chapter7: Employees Training and Development at Al Rajhi bank 7.1 Definition of Training Training refers to the set of activities intended to bring improvements in the performance of workers and further educate them to enhance their productivity. It is a system that receives inputs from different parts of the organization and then fuses them into a cohesive desirable outcome. A narrow definition of training shows that it is a formal procedure facilitating employee learning that positively affects the individual behavior and performance (Brookfield and Holst 69). 7.2 Phases of Training Al Rajhi follows several phases in its training process. In each phase of training certain inputs are acquired by the employees, these inputs are processed and output is generated for the subsequent phases (Blanchard 26). These phases are followed one after another to reach the desired outcome of the training. 7.3 Orientation program Orientation program is uniquely designed by the training department in the Al Rajhi Bank for its new employees. It helps the employees to perform the job efficiently by making them familiar to the organization’s work ethics, organizational polices and roles and responsibilities of the employees. 7.4 Training approaches at Al Rajhi In order to make its training programs successful, Al Rajhi determines its general business objectives and then develops training objectives according to the status of the organization and its training needs. Training programs are designed to distribute the new knowledge acquired evenly across the organization. 7.5 Training issues and problems Al Rajhi bank faces training issues due to the difference in the cultural background from which the employees have come. Since there are a large number of foreigners, cultural hindrances are significant. Besides, effectiveness of the training imparted depends on the intake capability of the employees, due to which often the training does not show the desired impact. Differences in training effectiveness creates problems in the operational level and conflicts with the Islamic law of banking. Chapter8: SWOT analysis Strengths The Al Rajhi Bank is the largest Islamic banking institution in the world. It has a unique training and development program customized for the needs of the employees, both new and existing. Comprehensive and specialized training is provided on the software used by the bank. Training on customer handling is provided which puts special emphasis on cross selling skills. It also imparts product based training. The bank provides on job training that allows the trainees to earn stipend while they are on training phase. The organization also has separate trainers for different departments. Weaknesses The training program of the Al Rajhi bank is built for training the employee for catering to the customers belonging to the upper middle class population in the Saudi Arabia. It therefore loses business opportunities available at the low income class of the society. The training and development program for new employees is designed for a short time period; three months. This does not provide the scope to train these employees to get totally accustomed to the culture and work environment of the bank. Less stress less is put on real life challenges, which keep employees unprepared for the real work ground. Opportunities Technical advancement opens avenues for modernizing the training procedure implemented by the bank. Product knowledge training might be introduced so as to make employees aware of the products offered by the bank. The bank might introduce training for its employees such that they would be able to provide better service to the client from low income groups. These people often receive poor behavior from the bank personnel. The bank has opportunity to perk up performance by the employees by imparting more training on real life challenges. Threat Al Rajhi follows stringent laws and regulations but there is lack of cultural training. This leads to less coordination among the employees. Other commercial banks are gaining on this front due to more coordinated servicing offered by them. While other banks are reducing their cost structure, Al Rajhi faces high training cost. Therefore the investment in training and development department is limited. Chapter 9: Training and development in other players Training and development occupies a significant position in the management structure of the banks and financial institutions in the country (Alzalabani 125). Currently there is shortage of trainers in the other Islamic banks in the country since most of them do not have such staff that possesses working knowledge of “Islamic fiqh and modern economics and finance” (Iqbal, Ahmad and Khan, “Challenges facing Islamic banking”). Hence at present other Islamic banks are hiring trainers that have graduated with dual specialization so that they can train employees with the knowhow of modern banking while abiding by the religious and cultural values of banking. Chapter10: Analyze my general experience at Al Rajhi bank My experience at the Al Rajhi bank has been fruitful. It has been an eventful experience for me since at several points of time I have been able to show my leadership skills. I have gained rich experience that would help me to excel at my professional career. Chapter 11: Recommendation The study reveals that employee training programs can be successful only when business objectives coincide with the training needs for the employees. Therefore, the bank must take training and development initiatives in accordance with its business objectives. The bank should use more automated processes in its operations and reduce cost. Employee training should e focused to improve customer relationship with the customers from the lower income population. Training and development measures have to be more inclusive. Reduction of cost would allow the bank to reduce rate of service charge to increase customer loyalty. Chapter 12: Conclusions This paper has presented an extensive study on the human resource management practices in the Al Rajhi Bank in Saudi Arabia. Results from this study shows that the bank is one of the leading financial institutions following Islamic practices. However, the operations of the bank are kept under strict surveillance of the religious surveillance body, due to which its normal business operations are sometimes hampered. In terms of HRM, the bank has an excellent employee training and development policy that would allow the bank to maintain its position in the international banking industry. Works cited Al-Dukheil, Abdulaziz M. The Banking System and its Performance in Saudi Arabia. London: Saqi Books, 2001. Print. AlKahtani, Abdulwahab S. “Involvement of Employees and Their Personal Characteristics in Saudi Construction Companies.” International Journal of Commerce and Management 10.3&4 (2000): 67-78. Print. Alzalabani, Abdulmonem H. “International briefing 11: Training and development in Saudi Arabia.” International Journal of Training and Development 6.2 (2002): 125-140. Print. Aswathappa, K. Human resource management. New Delhi: Tata McGraw-Hill Education, 2010. Print. At-Twaijri, Mohammad I. “Banks in Saudi Arabia.” International Journal of Bank Marketing 9.1 (1991): 11-16. Print. Blanchard, P. Nick. Effective Training, Systems, Strategies, and Practices. New Delhi: Pearson Education India, 2012. Print. Brookfield, Stephen D. and John D. Holst. Radicalizing Learning: Adult Education for a Just World. New Jersey: John Wiley & Sons, 2010. Print. Condrey, Stephen E. Handbook of Human Resource Management in Government. New Jersey: John Wiley & Sons, 2010. Print. Gatewood, Robert D., Hubert S. Field and Murray R. Barrick. Human Resource Selection. Connecticut: Cengage Learning, 2010. Print. Goyal, R. C. Hospital Administration and Human Resource Management. New Delhi: PHI Learning Pvt, 2005. Print. Gup, Benton E. Handbook For Directors of Financial Institutions. Massachusetts: Edward Elgar Publishing, 2008. Print. Harris, Hilary, Chris Brewster and Paul R. Sparrow. Resource Management. London: CIPD Publishing, 2003. Print. Iqbal, Munawar, Ausaf Ahmad and Tariqullah Khan. “Challenges facing Islamic banking.” IEFPedia. Islamic development bank Islamic research and training institute. 1998. Web. 9 July 2013. Mirza, Amna Asrar and Sumaira Riaz. “Training Needs Assessment in Islamic Banking Sector.” Qualitative Research in Financial Markets 4.2/3 (2012): 142-155. Print. Pastorino, Ellen E. and Susann Doyle-Portillo. What Is Psychology? Essentials. Connecticut: Cengage Learning, 2008. Print. Randhawa, Gurpreet. Human Resource Management. New Delhi: Atlantic Publishers & Dist, 2007. Print. Storey, John. New perspectives on human resource management. Connecticut: Cengage Learning EMEA, 1999. Print. “Vision, Mission and Values.” Alrajhibank. Al Rajhi Bank. 2013. Web. 9 July 2013. “IST networks fortifies Al Rajhi bank’s industry leading customer care with Cisco contact center upgrade.” IST Networks. Al Rajhi Bank. 2011. Web. 9 July 2013. Appendix Quantitative questionnaire Strongly Disagree Disagree Neutral Agree Strongly Agree 1. The training has satisfied my expectations. ? ? ? ? ? 2. I am confident that I can apply the knowledge I have learned. ? ? ? ? ? 3. All the training objectives laid down before the commencement of training have been followed. ? ? ? ? ? 4. The content of training was easy to follow. ? ? ? ? ? 5. The training materials were relevant and useful. ? ? ? ? ? 6. The trainer was conversant and well-informed. ? ? ? ? ? 7. Instructions were delivered in easy language. ? ? ? ? ? 8. The training objectives have been successfully met by the trainer. ? ? ? ? ? 9. Doubts have been cleared and questions have been entertained. ? ? ? ? ? 10. Separate time has been provided for review. ? ? ? ? ? Qualitative interview 1. Please elaborate on the existing training programs existing in the company. 2. What can be done to improve the standard of training in the company? 3. Do you think the training program is at par with the best practices in the industry? Explain. Read More