Kazi Wasim-uz-zamanMirza Farhat Anjum

Towsif Ur RahidMakin Rishalat Jitu

Al-Arafah Islamic Bank Limited:

A study into the HRM Policy, Strategy and Application

Banking Industry

‘State Bank of Pakistan’ renamed as

‘Bangladesh Bank’

Permitted foreign banks to continue

operationNationalizing local

banks

License for private banks

Aggressive investments of Local companies

Growth in GDP

Number of private banks went up

4 state owned banks, 5 specialized banks, 31 local private commercial banks and 7 Islamic Commercial

Banks and 9 foreign commercial banks operating

now

Industry Analysis

Popularity rising around

the world

Extraordinary growth and expansion

Islamic Banking Services from Conventional

banks

Establishment of a group comprising representatives of

central Bank, Islamic Banks and also the Central Sharia Board for Islamic Banks of

Bangladesh

Islamic Banking

Islami Bank

Shahjalal Islami Bank

Exim Bank

First Security Islami Bank

Al-Arafah Islami Bank

ICB Islamic Bank

Social Islami Bank

Name of Islamic Banks

Established as a private limited company on 1995

Follows the Islamic Sharia law strictly

Sharia based profit/loss system to get rid of the usury

Inauguration took place on 27 September 1995

AIBL’s authorized capital is BDT5000 million and it’s paid up capital is 4677.28 million as of

2010

Number of employees: 2500-3000

Al-Arafah Islami Bank Limited(AIBL)

Short-term deposits: One month’s MTDR (Mudaraba Term Deposit), three month’s MTDR, Six month’s MTDR, one year to three years

MTDRMudaraba Monthly Saving Scheme, consists of different amounts

with different time periods

Mudaraba Hajj scheme for hajjis

Murabaha

Bai-Muazzal

Brokerage house, Green Banking

Products and Services

OrganogramChairman

Managing Director

Board of Directors

Additional

Managing

Director

Deputy Managin

g Director

Executive Vice

President

Senior Assistant

Vice President

Assistant Vice

President

Assistant Officer

Junior Officer

Management Trainee

Officer

Executive Officer

Trainee Officer

Recruitment

External Recruitment

Corporate Web-site

Newspaper

Job Web-site

Interns (Less frequently used)

Internal Recruitment

Promotions & Transfers

Job Posting

Employee Referrals

Recruitment

Selection

Promotion Practices

Objectives

Enhancing the capacity of the

employee

Building an effective,

accountable committed employee

Equipping Human Resources with

requisite skills and techniques

TraineesManagement

Trainee Officers

Executive Officers

Branch Managers

Officers of different grades

Training and Development Practices

Training institutions

• AL-Arafah Islami Bank Training & Research Academy (AIBTRA)

• Bangladesh Institute of Bank Management (BIBM)

• Bangladesh Bank Training Academy

Programs

• Training courses• Workshops• Executive workshops• Executive

Development Program (EDP)

• Outreach workshops• IT training (ICT lab)

Training and Development Practices (Contd…..)

Total Training programs during 2013 : 79Total Trainees: 2861

Annual Performance

AppraisalVery strict

Promotion and salary decisions

Key consideratio

ns

Annual Performanc

e Report (APR)

Educational qualification

Training received

Performance Appraisal and Management Practices

Figure: Annual Performance Report

Compensation

• Basic salary • Allowances

• Housing (50% of Basic )• Medical, transportation

• Bonuses• 2 festival bonuses

• Incentive bonuses• Based on profit• 8 people last year

• Salary increment • For everyone• Exception : negative

APR

Leave

• Casual leave (15 days)• Earned leave (33 days)• Mandatory leave with

one basic (15 days )• 6 months of maternity

leave with pay

Compensation, Benefits, Pay Strategy Practices

• Recruitment from 2009Equal opportunity for women

• To maintain decency and disciplineFemale dress code

• To provide comfortable environment

Minimum of two female employees

at a branch

• To remove monotonyFull implementation

of the mandatory leave

• No personal relationships and references biasNo employee bias

Ethics, Justice, Fair Treatment Practices

Open door policy

Mandatory transfer of employees every three

years (success rate

60%)

Employment for the family members of a

deceased employee

6 months maternity

leave (with full pay)

Exit interview

Labor Relations Practices

Only people from Islamic background are recruited

Female dress code

No single women can be

appointed in one branch

Differences with other conventional banks

Mandatory leaveVery strict annual performance

appraisalTraining and skills development

Ease of access

Employee retention

HR Strength

HR weaknesses

Transfer of employees

At AIBL it’s mandatory to transfer employees after every 3 years. This policy has 60% success rate. it creates a big

problem as for the branch managers and employees.

HR success

Year Turnover rate2007 4.12008 2.12009 1.092010 0.952011 0.482012 0.092013 0.04

Recruitment through BIBM

Employee turnover rate

Employment support after

death

Budget planning

Diversification of HR

department form Head

Office

Recruitment and selection

team

Future Direction of AIBL

Conclusion

Al Arafah Islami Bank Limited (AIBL) follows some unique recruitment and HRM policies. The analysis of AIBL under HRD revealed that people are most valuable resources for the progress of the organization. AIBL make use of its most important resource by developing and satisfying every need of the employees. And the effective use of the human resource makes the organization to achieve up to its expectations and desired goals.