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The report is an in depth analysis of the multinational bank ABN AMRO. The report was aimed to study their managerial set-up, how they go about their business, what problems they have been facing and how can they further improve their presence in the current environment. In the end, we would like to thank all those people who were instrumental in the completion of this report & took out time from their very busy schedules to help us, ABN AMRO in trusting us and providing us with their data, and last but no the least, we would like to thank Madam Iffra who 'will' take out time from her busy Schedule to check our report no matter how boring she thinks it to be and for constantly tolerating our mistakes and shortcomings.
INTRODUCTION The aims and objectives of this report are as follows:
To conduct an analysis of the existing management structure of the firm. To study the hierarchical setup of the firm & to study the flow of information within this structure. To study the application of “Organizational Behavior” for routine (structured) decisions and exceptional situations (unstructured) decisions in the firm. To study any innovations brought about by the firm in order to fulfill its needs. SWOT analysis of the firm (strategies). To suggest various solutions to overcome any draw backs within the organizational structure and decision-making process of the firm.
ABN AMRO is a prominent international bank, its origins going back to 1824. ABN AMRO ranks 11th in Europe and 18th in the world based on total assets. It’s network is comprised of over 3,000 branches in more than 60 countries, a staff of about 104,000 full time employees and total assets of EUR 637.5 billion (as at 30 September 2004). ABN AMRO Pakistan was established in 1948 and was the first foreign bank to be granted a license by the Government of Pakistan. Over the last four years, ABN AMRO has significantly enhanced its profile in Pakistan, and is comfortably ranked amongst the top 3 foreign banks in the domestic market. The Bank currently has a presence in 3 cities namely, Karachi, Islamabad & Lahore and employs 300 employees countrywide. A network of seven online branches strategically located in all the major cities supports an extensive and rich Consumer Banking foundation. ABN AMRO invests heavily in employee development by structuring personalized development plans for each employee. The employees are trained in core banking skills and latest
developments. They pride themselves in building and maintaining a corporate culture that is conducive to high performance, teamwork and responsive to change.
With total assets of over PKR 46 Billion, equity of PKR 3.1 Billion, and deposits of almost PKR 35 Billion, ABN AMRO is placed and well positioned as one of the larger foreign banks in Pakistan. They have posted pre-tax profits of nearly PKR 1.3 Billion in 2002, and the ROE of almost 43% is amongst the highest in its peer group. Over the last four years, ABN AMRO has significantly enhanced its profile in Pakistan, and is comfortably ranked amongst the top 3 foreign banks in the domestic market.
Introduction Of ABNAMRO
ABN AMRO Pakistan boasts an extremely diverse and demanding corporate and financial institution's customer base. And as such, they have developed products and services that focus on meeting these specific needs of their customers. In essence, they believe that these products and services have been a direct outcome of years of interaction with and feedback from their customers in Pakistan and around the globe. Their local and regional product management units meet regularly to improve upon and introduce state of the art products and services to help keep in line with the changing needs of their customers. They have also developed strong strategic liaisons with other external
solution providers (local banks, couriers, security companies, etc.), and are able to extend their domain into areas where they feel niche suppliers provide advantages which they can extend to their corporate customers. They offer long-standing expertise and experience in Consumer Banking, Corporate Banking, Investment Services, Treasury, Cash Management Services (allowing customers to provide payment and disbursement instructions electronically), and Correspondent Banking (for local and international transactions).
‘To be the best of the best and the only place to work’.
‘We strive towards service excellence’.
ABN AMRO's mission is to create maximum economic value for the shareholders through a constant relationship focus on the financial services needs of the chosen client segments and a strict adherence to
the financial targets. It is operating in three principal customer segments, aiming to maximise the value of each of these businesses as well as the synergies between them. Excellence of service to the clients and leadership in the chosen markets are of paramount importance to the long-term success.
Above all, it is committed to integrity in all that it does, always, everywhere.
It respects every individual, draws strength form equal opportunity and diversity, at the same time supporting personal growth and development. It benefits from the entrepreneurial spirit of each individual.
Teamwork is the essence of its ability to succeed as a universal and international network bank. The overriding loyalty is to the good of the whole organisation, requiring all to learn from each other and to share skills and resources worldwide for customers’ benefit.
In the service of customers, it is committed to the highest standards of professionalism, pursuing innovation, deploying imagination,
being open to new ideas and acting decisively and consistently. It determined to deliver outstanding quality so that the relationships with the customers are long lasting and close. Despite of this, it believes that people come first. “It’s the people, not money that makes the difference” is its motto. ABN AMRO is an ambitious institution, committed to continuous improvement in everything it does. The success depends on excellent performance and a solid reputation. Transparency and dialogue are of crucial importance in all relationships to maintain its reputation as a respectable and reliable institution. Based on its four Corporate Values, it has formulated Business Principles to guide all employees in their daily work. Their Business Principles are: • We are the heart of our organisation • We pursue excellence • We aim to maximise long-term shareholder value • We manage risk prudently and professionally • We strive to provide excellent service • We build our business on confidentiality • We assess business partners on their standards • We are a responsible institution and a good corporate citizen
• We respect human rights and the environment • We are accountable for our actions and open about them • Business Principles alone are not the answer to every problem, but they do challenge us to translate their spirit into our daily practice and shift our horizons beyond short-term profit to long-term value creation through sustainable development.
ABN AMRO EMPLOYEES: THE HEART OF THE ORGANISATION
1.They are the heart of their organisation
Their spirit, the pleasure and pride they take in their work, shows the importance they attach to fulfilling their mission, living their Values and meeting the expectations of their audiences. They all have a responsibility to create and maintain an open culture, based on respect, loyalty and trust. This is the foundation for organisational success as well as their personal development and satisfaction.
2.They pursue excellence They shape the future of ABN AMRO by delivering the highest quality service to their clients while maintaining their solid reputation and adhering to financial targets. Meeting their organisation's ambitious goals requires excellence in performance and behaviour. They recruit the best-qualified people and
continuously develop them in view of providing competitive advantage in their chosen markets. They also assess their performance thoroughly and regularly.
THEIR EXTERNAL AUDIENCES: THE WORLD IN WHICH THEY LIVE AND THEIR BUSINESS PRINCIPLES
3.For their shareholders they aim to maximise long-term
The measure of the success of their business is the growth of its longterm shareholder value. In seeking to maximise this value, they manage the interests of clients, employees and capital providers, as well as society and the environment. Capital and other resources are allocated according to where they can best realise this objective of long-term shareholder value.
4. They manage risk prudently and professionally Judging and managing risk is fundamental to successful banking. They take a prudent and professional approach to all types of risk, from credit to operational and reputation risk, while meeting their clients' needs and seizing suitable business opportunities.
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5.For their clients they strive to provide excellent service
Without their clients they have no business. They aim to be the proactive and trusted financial partner in all phases of their clients' lives. They listen to their clients and offer customised and state-ofthe-art advice and service, based on their vast expertise and extensive network.
6. They build their business on confidentiality
Confidentiality is the foundation for long-term relationships that benefit both their clients and their own organisation.
With Their Business Partners
7. They assess business partners on their standards
They also expect their clients, business partners, suppliers and other audiences such as Non-Governmental Organisations (NGOs) to practice high standards consistent with their own legitimate purposes. They take their standards into account when assessing ABNAMRO’s mutual relationship.
8.In society they are a responsible institution and a good corporate citizen
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They are aware of and act on their broader responsibilities to the societies and communities in which they operate. They behave as good citizens, working closely with local regulators and complying with their regulations. They play an active role in local communities, as well as in the global community and suitable international forums.
9.Theyrespect human rights and the environment
Respecting human rights and the environment is an integral part of responsible social behaviour and corporate citizenship.
COMPLIANCE: THEIR BUSINESS PRINCIPLES ARE FOR REAL 10.They are accountable for their actions and open about them
Accountability and transparency are great business strengths and important in all their relationships. They are accountable for all activities over which they have management control. They provide relevant, timely and correct information in an open way. Within the boundaries of confidentiality, they are open to dialogue with parties who have a sincere interest in them.
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ABN Amro's main objective is to provide sustainable value for their clients, employees and shareholders. To help achieve that aim, they run their business responsibly: with integrity and openness. That implies that they also consider the interests of other stakeholders in society, minding environmental, social and ethical issues and looking after the interests of future generations. Companies can have a 'direct' impact on society and the environment – through their employees and facilities – or and indirect impact – through their business activities. They as a bank make the biggest contribution to sustainable development indirectly through their choice of business partners (i.e. clients and suppliers), how they work with them, and how that affects the environment and society. ABN AMRO is committed to promoting sustainable development actively across their industry and in business in general. They believe this will help to raise the standards of international business and restore trust among stakeholders, following the crisis of confidence in corporate integrity.
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Whatever choices they face, they know that focusing on the areas where they can have the most impact is crucial to their effectiveness.
Their responsibility towards society and their business objectives create the need to make balanced and transparent decisions. To help them focus, ABNAMRO have formulated six themes that are key to its sustainability performance: 1.Being accountable and transparent; 2.Protecting its assets; 3.Providing responsible financial services; 4.Being an employer of choice; 5.Minimizing our impact on the environment; and 6.Supporting local communities. ABNAMRO’s approach to these themes mirrors its approach to business: They aim to create value, by embedding sustainability in their decision-making and operational structures. They know they still have a lot to do, and that they are not perfect. ABNAMRO is on an ambitious, ongoing journey and will continue to engage with stakeholders, as this will enable it to improve further. They believe sustainable development is the right way forward, and
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that this should be underpinned by the allocation of dedicated resources throughout their organization.
Size Of abnamro
ABNAMRO operates 7 branches all over the country, 4 in Karachi, 2 in Lahore and 1 in Islamabad. It is seeking for more areas to grow its network.
Main Branch (Country Head Office) Defence 16-Abdullah Haroon Road.
Defence (Mini Branch)
• Shaheed-e-Millat Branch • Gulshan-e-Iqbal Branch
Main Branch (Shahrah-e-Quaid-e-Azam).
• Cavalry Ground Branch
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• Main Branch 15 Markaz F-7
DEPARTMENTALISATION AND SET-UP
ABN AMRO is a multinational. They don’t follow a normal organizational structure. They call their structure a ‘Silo’ despite of the fact that this structure is more evident at lower managerial levels than at the top. At the top, one would expect to see direct functional lines and connections between managers and the heads. This is not so. Being a multinational, ABN AMRO has a completely different setup. Let’s just assume that for the time being, we will be concentrating on the set-up that exists in Pakistan. Naveed A. Khan is the Country Representative. All employees work under his leadership and he is answerable to the bank’s corporate headquarters and the regional one.
THE MARKETING DEPARTMENT: A CLOSER VIEW
ABN AMRO provides its customers with numerous services. They normally cater to (types of customers and services that they are provided are according to their needs:
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1. Consumer Clients 2. Wholesale Clients 3. Working Capital Group 4. Financial Markets The Marketing department is mainly responsible for the following: 1. Increasing sales. 2. Advertising of new/existing products and services 3. Strengthening relationships with existing customers. 4. Establishing relationships with new customers As is the case with the rest of the departments, the marketing department plays a vital role in fulfilling the ABN AMRO vision i.e. “Relationship Banking”. This is not an exaggeration. In reality, the marketing department IS one of the major driving forces behind a firm, especially if it is of a similar set-up as is ABN AMRO i.e. an organization that provides its customers with services.
These are the normal clients, like in any other bank. One can operate your accounts from any ABN AMRO branch in the country, or through 24-hour ATMs and Non Stop Banking Centre's (NSBC).
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Aimed at a more specific customer class, these services aim at fulfilling specific needs of customers. These products and services have been a direct outcome of years of interaction with and feedback from customers in Pakistan and around the globe.
Working Capital Group
Working Capital Group provides cash management, trade services, custody and clearing solutions to corporate clients, financial institutions and the public sector. It has the reach and expertise to manage the financial and commercial functions of both corporate and financial institutions to the greatest effect. Emphasis is laid more on the 'global level'.
ABN AMRO's Financial Markets (FM) business draws on an extensive global network ensuring complete coverage for all markets. Through the comprehensive product range and high degree of professional commitment offered by the bank, they aim at offering their clients a solid foundation upon which to develop and grow long-term business relationships. By organising its FM business under the disciplines of origination, trading and distribution, ABN AMRO is able to optimise product delivery and product development, and
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fulfil the sophisticated requirements of both its public and private sector clients. As a major player in Pakistan's foreign exchange and money interbank markets, FM remains well poised towards providing unparalleled service to its corporate and institutional clientele. The department consists of only five employees who work full time. Being a small team, decisions are made faster and relationships, which exist between the departmental employees, are cordial. The department works keeping in view the objectives. The marketing head is in charge of both the Assets and Liabilities products, which in turn have their heads in the form of product managers. The product managers each have one subordinate who are termed as ‘helpers’.
This department is entrusted with a lot of challenging tasks to accomplish. It is in charge of producing different campaigns for publicity and brainstorming over new products. It has to work keeping in view the company’s long-term mission. Besides this, the department has to coordinate its activities with the bank’s advertising agency (ASIATEC) and their researchers A C NIELSON. Apart from that, this department also has to ensure as to how customers perceive the bank.
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Products and services offered
The department is involved in the provision of two products; assets and liabilities. Liabilities include current account, savings and term deposits. The assets include the loans, which the bank offers to households and firms. The department also has a big say as to how to carry out advertising campaigns and generates ideas for prospective new products. Creativity is this department’s hallmark.
THE IT DEPARTMENT: A CLOSER VIEW
The IT department plays a major role in facilitating tasks at ABN AMRO. Technological advances in the past few years have increased the scope and availability of such helpful machines, which could only be read about in science fiction novels only a few years ago. Utilizing this new technology to the fullest is essential if a firm is to survive in this competitive world ABN AMRO is always on the look out for methods through which it can gain an edge over its competitors. When it took the decision to computerize its tasks and environment, it must’ve thought that this was probably one of the best decisions that it has taken for a long time. ABN AMRO prides itself for the strong computer network that it has recently installed at its head office. In doing so it has also been able to establish connection with its seven branches all over Pakistan so as to monitor them and retrieve information from them as soon as
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possible. Connectivity is established by the use of various mediums and in turn, the head office is connected with the global server of ABN AMO. The bank mainly uses the IS in the following categories: • Operations support and • Communications.
The whole information system is custom built and comprises of various smaller software’s that help in various departments such as accounting software’s, teller software’s, ATM software’s, Human resource database management systems etc. all these software’s help a lot in providing the customers with better and on time services. Information is communicated by a very strong internal memo system. Every document is written (stored) and then passed on to others in clear, concise language. Documentation is properly implemented. All employees are given direct lines and specific e-mail accounts such that they can easily communicate with their superiors. There is a lot of emphasis on accountability and communication channels are open. A great effort is made that information is neither misinterpreted nor lost and thus every one to whom the memo is sent is bound to give an endorsement. Besides this employees are given the opportunity to remove their grievances by answering various questionnaires. The bank makes extensive use of BBS, groupware, teleconferencing etc.
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THE HUMAN RESOURCES DEPARTMENT: A CLOSER VIEW
As is the case in any other organization, the Human Resources department at ABN AMRO plays a key role in running the bank. The HR department is responsible for the following: 1. Selection. 2. Training. 3. Motivation. 4. Leadership 5. Evaluation of employees.
6. Reward System.
The HR department is of uttermost importance to any firm. It is probably one of the most important support departments present. Truly said, ‘Organizations don’t change, people working in them do’. But, nowadays, it is pretty evident that an organization is reflected in the people it employs. Had there been no people, organizations wouldn’t exist at all. People form a major link in the whole economical process of households and the firms catering to them. In case of ABN AMRO, one cannot take a capital-intensive approach to a business such as this. It involves a lot of dealing with customers and who can do that better but people themselves? Thus the bank
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emphasises that it employ only the best of which the labour market has to offer.
Employee selection process at ABN AMRO is pretty rigorous. Advertisements are placed in leading newspapers. Applications are scrutinised and interviews conducted. Employment criteria at ABN AMRO are of two types, contractual and permanent. Permanent employees at ABN AMR are known as ‘internal customers’ every employee first has to pass through the contractual phase. If he/she is good enough, his employment is made permanent.
The story doesn’t end here. People are kept under constant check. The HR department is always on the lookout for good work and talent within and out of the organization. After selection, there are times when training sessions are held. These training sessions are one daylong procedure. More like orientation of the new employee. The session is one day long and includes detailing the employee about the following: Standards of company. Dealing with customers. Obligations towards others are told.
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With more than 100,000 employees in nearly 3,600 branches and offices around the globe, ABN AMRO uses annual objectives to manage employee performance. Smart Objectives are a key part of this process, providing the criteria that managers use to create employee goals and objectives. In just four weeks, Centrax Corporation developed an interactive CD-ROM for ABN AMRO that provides managers with information and techniques for conducting objective-setting meetings with employees. ABN AMRO has traditionally conducted management training in stand-up classroom sessions using hardcopy materials. Recently, ABM AMRO began looking for a training solution that could be delivered without regard to time, distance, or location. Their continuing goal is to improve training availability and consistency, while reducing travel costs and time away from the job. ABN AMRO enlisted Centrax Corporation, an online learning development and design firm based in Chicago, to develop a Smart Objective multimedia training application. Centrex’s challenge was to create a visually engaging and interactive adaptation of the classroom training in only one-month. There was no time or budget to shoot live video in a classroom, but they wanted to make the content come alive. Centrax required an authoring environment that would allow them to simulate an instructor-led classroom environment using still
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photos, audio, and animation. The final application also had to be deliverable as a CD-ROM as well as over the company's Intranet as a downloadable course. Centrax chose Authorware to create the courseware because it enabled them to integrate a full range of rich-media components into a single interactive training application. By employing lightweight Flash animations instead of digital video, ABN AMRO kept the application small, facilitating delivery of the training over the company's Intranet. "We've utilized a wide variety of authoring tools in the past, but recently we standardized on Macromedia." The goal of the Smart Objectives Manager's Toolkit training is twofold: to teach managers about the Smart Objectives process, and to teach them how to present the Smart Objectives process in a traditional stand-up training session. The existing Smart Objectives training material consisted of a 12-page toolkit, which offered suggestions to managers on how to conduct a Smart Objectives training meeting, and 12 handout sheets and a brochure to be presented to the participants during the meeting.
Employees are evaluated according to the following job constructs:
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Punctuality Attendance Communication skills Work Habits Efficiency Accuracy Enthusiasm Value added to business
Each and every employee is evaluated accordingly and the high achievers are appraised every June and December. Their names are sent to the regional office for further evaluation and promotions (Existing employees are the benchmarks).
Motivation at ABN AMRO is evident at all managerial levels. Every employee, no matter what position he/she is at, has the opportunity to advance through the organization to a higher spot. Contractual employees always have the incentive of being made permanent. Permanent employees have the opportunity to advance. Even the country manager himself has the opportunity of being promoted to the position of regional manager. ABN AMRO is firmly opposed to discrimination in employment, and is committed to upholding employees' right to work in an environment free of harassment and intimidation. They have created avenues for employees to voice concerns as confidentially as possible. ABN AMRO employs about 105,000 full-
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time equivalent staff members in 52 countries and is committed to embracing diversity. At ABN AMRO diversity is about each individual coming to terms with his or her attitudes, beliefs and expectations about others and gaining comfort with difference. They are on a journey to become a truly inclusive and equitable organisation - one that makes full use of the contributions of all employees. In addition to being a moral and social responsibility, they believe this is also steeped in good business sense. An environment where all employees feel included and valued yields greater commitment and motivation. They not only benefit from the creativity that diverse perspectives can inspire, they also enjoy the greater productivity and competitive advantage that comes from being an attractive employer for talented employees from all walks of life. What more motivation can there be than a better job position?
5.Leadership and Diversity Programme:
Leadership is the influencing people to follow in the achievement of common goals. Keeping in view the importance of leaders in an organisation ABNAMRO have launched its Leadership and Diversity Programme in the first quarter of 2005 with a group of 80 participants. This programme is a medium-term modular programme focusing on gender and other diversity issues. Participant groups come together four times during a five-month period to cover modules that explore their unique personal leadership style in relation to working in a diverse setting in terms of both gender and culture. The programme focuses on building up participants' selfawareness of their leadership style and how they can bring their own unique talents to the surface. It also examines what effect they can have on the work environment to ensure that others feel comfortable expressing themselves. Between modules, personal coaching is
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provided to help participants apply what they have learned to specific contexts and goals. This programme is targeted at VPs/Directors with at least one year of experience in ABN AMRO, across all BUs.
6.REWARDS AND OTHER INCENTIVES:
With a better job position come more incentives. ABN AMRO provides its employees with numerous incentives for example free memberships at famous clubs, sports complexes etc. These incentives and a higher pay are enough to serve as motivation for the employees. Employees have to work hard for being promoted though. Competition at ABN AMRO is very tough as they hire top class people only. All these evaluations and so-called ‘Appraisals’ are carried out twice a year i.e. during June and December. Permanent employees too have a time limit. Retired employees of ABN AMRO are provided Appreciation gifts and free medical services. Retirement also results in a golden handshake.
DECISION-MAKING AND THE COMMUNICATION PROCESS.
Decision making on a strategic level involves the regional office and the local bank’s headquarters. All the important decisions are made in the boardroom with the country representative chairing the
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meetings. Decisions are made and then conveyed to employees. Very rarely is input taken from employees in the middle or lower level. Apart from that, decisions on a day-to-day basis involve a lot of employee participation and input. It is these decisions due to which employee morale is increased as employees reap the benefit of participative approach of management. Input is taken from all the stakeholders and then is vetted for being feasible. Decisions are communicated not by word of mouth but in writing and through the strong computer network within the building. The VP’s and other line managers enforce implementation of decisions. Weekly meetings and other performance evaluating forms are used to gather information about the status of the given task and diversions from this are easily spotted when the minutes are made.
Goals of ABN AMRO:
The goal of ABN AMRO is to create value for its clients. Key in our relationship approach is a constant focus on the financial services needs of our client segments. It is through the professionalism and motivation of our global staff that we realize this value, resulting in superior service and integrated financial solutions. Both locally and globally, our clients increasingly require a comprehensive span of products, professional skills and service.
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international reach, sector expertise and a pool of human talent. Managing for Value contributes to the most effective integration of these assets to the client's service. It is this client-led strategy that will drive the development. Our goal is to be recognized as a leader in service, quality and client satisfaction. We aim to achieve our objectives by working in partnership with our clients, employees and stakeholders. We aim to achieve our objectives by working in partnership with our clients, employees and shareholders. We endeavor to create a stimulating work environment where our employees can leverage their skills and experience to build a unique product and service offering for our clients.
ABNAMRO has adopted a focused approach to sustainability, comprised of five main goals, which are as follows:
delivering responsible financial services;
being accountable and transparent;
being a great place to work;
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supporting local communities; and
minimizing direct impact on the environment.
Delivering responsible financial services :
ABN devotes the largest section to the area in which its core business has the greatest impact on sustainability: delivering responsible financial services to clients. This discusses the bank’s overall approach to risk management, followed by that of its three business units. In terms of its overall approach, the following points are of particular interest.
Being accountable and transparent :
ABNAMRO approach is of accountability and transparency, such as corporate governance, a transparent financial system, embedding sustainable development in the organisation and stakeholder engagement. The bank has developed a number of policies in these areas, notably an instruction manual containing internal governance policies (not available to the public), a global Client Acceptance & Anti-money Laundering Policy and a Whistle-blowing Policy.
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ABNAMRO was among 11 banks to develop the Wolfsberg Principles, a set of global anti-money laundering guidelines for commercial banks.
Being a great place to work:
ABNAMRO manages human resources on a decentralized basis, though it is rolling out an enhanced group-wide human resources information system. Four main issues are addressed: professional learning, health and safety, employee engagement and diversity. ABNAMRO identifies a number of important goals, notably to conduct a survey across all business units in order to measure employee engagement and also to develop a corporate strategy on diversity.
Supporting local communities:
supporting local communities. The bank currently lacks a groupwide strategy for donations and charity. Through initiatives at the local level, the company gave a total of €58,201,000 in sponsorship and donations. It highlights some examples of support to local Communities through local business units.
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Minimizing direct impact on the environment :
While acknowledging that its main environmental impact is indirect, through its financing and investing activities, it focuses on the bank’s in-house environmentalmanagement, including energy consumption, waste and travel.
ABNAMRO itself acknowledges that it has ‘a long way to go’ and for each priority issue has identified key goals and initiatives to spearhead its efforts. These include:
developing a bank-wide program to raise staff awareness and build skills related to sustainability;
further integrating sustainable development into business processes through policy development and implementation for sensitive sectors;
stepping up the development of bank products addressing environmental, social and ethical issues;
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expanding the range of sustainable investment products available to clients;
developing the bank's sustainable development strategy through dialogue with both internal and external stakeholders, especially on topics of community development, green buildings and supplier diversity; developing a group diversity policy, as well as a group policy for procurement that integrates social and environmental criteria; and
Encouraging business units to develop energy reduction plans
and targets. We strictly follow a relationship approach, which keeps clients' requirements clearly in focus and provides excellent service through the professionalism and motivation of our employees across the globe. Adhering to the principles of Managing for Value - allocating resources to where they earn the best long-term returns and measuring the results - and exploiting synergies between the bank's businesses maximizes economic value for our shareholders. The ABN AMRO Values and Business Principles are the framework within which we conduct all our business. The ABN AMRO Foundation seeks to make a direct contribution to the United Nations' Millennium Development Goals, particularly to
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the first goal of eradicating poverty and extreme hunger. The Foundation supports and stimulates entrepreneurship within communities, and educates and empowers people to create the conditions that will lead them to sustainable livelihoods. This makes it possible for communities and individuals to improve their standard of living and generate income. By empowering people through the projects we support, we can make a real and sustainable difference to their lives.
ABN AMRO is an international bank with European roots. They have a clear focus on consumer and commercial clients in their local markets and focus globally on select multinational corporations and financial institutions, as well as private clients. Their business mix gives them a competitive edge in their chosen markets and client segments. ABNAMRO’s strategy is built on leveraging its advantages as a Group to create the best value for – and with – its clients. It is summarised in five points.
1. Creating value for their clients by offering high-quality
financial solutions that best meet their current needs and longterm goals. 2. Focusing on: • consumer and commercial clients in their local markets in Europe, the Americas and Asia, and globally on • selected multinational corporations and financial institutions • private clients
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3. Leveraging their advantages in products and people to benefit
all their clients. 4. Sharing expertise and operational excellence across the Group. 5. Creating 'fuel for growth' by allocating capital and talent according to the principles of Managing for Value, their valuebased management models.
They aim for sustainable growth that will benefit all their stakeholders: their clients, their shareholders, their employees, and society at large. The ABN AMRO Corporate Values and Business Principles provide the framework within which we carry out their operations. They are active in four principal customer segments:
Personal Banking Private Banking Business and Commercial Corporate and Institutional.
Focus on the mid-market
Although they serve a broad range of clients, their strategic focus is on the mid-market segment. This is the client area where they have a strong and distinctive competitive advantage and where they feel
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they can be most profitable in the future. The consumer mid-market consists of clients who require more than a basic banking package (mass affluent and private clients), but who don't yet fall into the small category of their top-end private clients. The commercial mid-market ranges from mid-sized companies in their home markets to a smaller number of large multinational clients and financial institutions. Still, clients in their other segments are essential to providing sufficient scale and ensuring product innovation. The success of their focus on the mid-market depends on their continuing presence at the top end of the market and the mass-market segment. The focus on our primary target clients will also guide their future investments and acquisitions to enhance profitable revenue growth.
Another key element of their strategy is deriving more value from being one Group. The creation of a shared product organisation comprising payments and trade, called Transaction Banking, and the creation of a Group Services organisation that oversees all services and operations in the Business Units and in Group Shared Services, will enable us to leverage their global advantaged capabilities and increase the impact of their investments in these areas. The mid-market franchise outlined above will be the growth engine of the Group, and they have therefore created two global cross-BU segments: a consumer segment and a commercial segment. These two segments will drive growth by working across our Business Units.
The ABN AMRO Group is well positioned to capitalise on its focus on the mid-market segment. Success requires a combination of local and international capabilities:
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• local relationships • an extensive and competitive product suite • efficient delivery • sector knowledge (in the case of corporations) • international network ABN AMRO is one of the few banks in the world that can deliver on all of these, in many cases, uniquely so.
• ABN AMRO's greatest strength is the name and what people associate with it. Its projects that are for the betterment of society make customers loyal to it. • Most of the employees working at ABN AMRO are qualified MBA's. • ABN AMRO has always emphasised on good service, and that is exactly what they provide their clients with. • ABN AMRO’s open door policy gives a sense of ‘homeliness’ to its clients thus attracting more of them. • A diverse and strong MIS with numerous software to assist in day-to-day office work and the decision making process. • Well-established credibility (inter nationally as well as nationally). • Strong and well planned marketing strategies
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• Good training of employees and development of current business. • A diversified skill set.
o Small tasks require a lot of documentation and there is a lot of wastage of time and effort. o The regional office needs to be informed of routine decisions and in a lot of cases their approval is mandatory for change made. This makes the whole exercise very exhaustive. o There a lot of grey areas in the organizational chart resulting in lots of personality clash. Besides, there are some departments like the HR department, which are not represented in the board meetings. The problem of parallel authority is very grave as it makes to a degree a mockery of the authority of the country representative. o No direct chain of command is evident between lower managerial levels as well.
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• The economy is growing at a faster rate compared to three years back resulting in increased demand for loan able funds from the private sector. This makes the opportunity for increased profits. • There are some new products in the pipeline which the bank hopes would give it competitive advantage over its rivals. • Government legislation promoting consolidation of business scale making the bank benefit from its vast assets base.
o Local banks have in recent times attracted their top talents by offering them very high salaries and other perks which the bank couldn't offer resulting in at least two of their top managers resigning in the last two months. o Local banks are increasingly undercutting the rate at which they offer loans making the banks offer unattractive thus eating into its revenues.
THE FIRM: A CRITICAL ANALYSIS
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There is a parallel system of organization, which is followed in ABN AMRO. The country manager is the highest authority to report to in the country. He/she solves all administrative problems but when it comes to job assignment to the top leadership; the country manager's hands are tied. The top leadership gets their instructions directly from the regional head of that particular department. Thus, there is duplication of authority and the top managers have less of an incentive to follow the country manager's orders whose position in their view is largely symbolic. This makes it difficult to lead the organization with a single goal besides bringing in its wake problems of communications. The regional HQ along with the fringe benefits sets even the salaries of the top managers. Thus, the top managers have somewhat of a problem submitting to the authority of the country manager as to them 'he doesn't have one'. The HR department is understaffed and not represented at the highest level. It only employs 4 people. Some of these people are not in the city regularly and this increases the workload of the others besides it makes it difficult to debug problems. The firm sometimes becomes very bureaucratic and small tasks need approval delaying the task. The red tape problem no matter what is very much present and ultimately decisions need to be approved by the regional office.
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A major problem, which has assumed tremendous proportions is that, the labour turnover has increased a lot in the past few months as lots of the top managers are attracted by the bank’s competitors. This is because some have become frustrated with the role of regional office, others have become tired of the amount of work they have to put in and yet others are not satisfied with the salary they receive.
The biggest problem is the parallel structure of organization. The suggested solution according to our study of management is to define specific boundaries as to where the authority of the country representative ends and is superseded by that of the regional office. This would eliminate a lot of personality clashes besides helping the other people to contribute gainfully in boardroom meetings and reduce the grapevine problem. A feeling of helplessness tends to creep in the managers minds when sometimes the regional office does not fully assent to their views and decisions are imposed on them. This can be avoided once the regional office accepts one employee of each department on the decision making panel. This would remove the misgivings of the local bank’s managers to the decisions of the regional office.
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A major problem is that HR department is not represented in the boardroom meetings. The HR department does not have a VP2. Only VP2’s have the privilege to sit on the boardroom. Thus, important points, which affect the whole organization’s employees, are not raised at all and HR department has to depend on other top managers to raise problems. The HR department as already stated employs just 4 employees and these employees are under staffed and overworked. Diluting authority to a degree can eliminate the bureaucracy problem but this can only be possible once the regional office is prepared to give some leeway in this regard. This would speed up decisions.
Finally, we would like to thank every one who was helpful to us through out the one hectic in which we worked furiously to meet the report deadlines. Before closing the document, we would like to mention a few more things. The Silo form of organizational set-up was probably the most interesting thing that was discovered by us at ABN AMRO. How they continue to function with such a set-up is a wonder to watch as it does have major disadvantages.
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In the end, we would like to thank Madam Iffra who has taught us all that we do know about proper management. With this, we close the document.... only with these last few words... "It goes on...”
****** The End*****
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