1. The HR department at Affluent Advertising proposed several changes after studying employee issues, including assigning permanent client responsibilities across departments, creating job descriptions, and implementing performance evaluations and bonuses. 2. The CEO responded by rejecting some proposals, such as external training and anonymous grievance collection, and altering others, including removing department heads from evaluations and reducing transparency around bonuses. 3. Disputes emerged between the intentions of the HR department to address employee concerns and the CEO's preference to maintain control and prioritize other factors like costs.

1. Instruction for final exam:
1. All students will bring their own copies of case study during exam.
2. Write your name and registration no. at the top of your copy.
3. No text should be written on your copy except the name and reg. no. If any text found on the
student’s copy, then paper will be cancelled immediately.
HRM at Affluent Advertising (Pvt.) Ltd
Following case has been extracted from the original case study written by Faiza Muhammad under the supervision of Assistant Professor Farzad
Rafi Khan to serve as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
Names of individuals and locations have been disguised on the request of Affluent Advertising (Pvt.) Ltd to maintain confidentiality.
COMPANY BACKGROUND
Established in 1981, Affluent came into existence as a much needed entity for meeting the growing
demand of the country’s business circle for print and electronic mediaadvertising. In addition, it also
served as an entrepreneurial milestone in the career of Iftikhar Arshad, a renowned journalist of the
country.
Affluent was initially based in Karachi but with the passage of time, offices were opened in Lahore,
Peshawar, Quetta and the capital city of Islamabad. Each of these branches was not only registered
independently but also run autonomously by a different family member. Thus, all financial matters of
each branch were independently handled and individual annual reports were published. Clients were
divided on the basis of location, that is, a company based in Lahore was served by the corresponding
branch, and so forth. If the clients were geographically dispersed, the location of its headquarter
determined the serving branch. The profit generated by each branch belonged to the family member
heading that branch.
Structurally, each branch was designed identically, that is, around functional areas such as client
services, creative and copywriting services, graphic designing and printing, media buying, event
management services, business development, ac-counts and administration (see Exhibit 1). The founding
culture of the organizationwas rigid and encouraged centralization, efficiency, high productivity and
individualresponsibility. All company policies were strictly written in black and white and a manual
containing standard operating procedures was given to each new employee.
Affluent usually hired fresh graduates with 10–15 years of education, who willingly offered their
services at much lower wages than the industry norms. These employees learned through trial and error,
and eventually replaced the more experienced lot, thus rendering a high retention rate. Those who did not
show any improvement weretested in other departments and only rarely terminated.
With these design attributes, Affluent enjoyed the fastest growth rate for about a decade. Its clientele
became the second biggest in the industry. It also gained a mono-poly in the government sector, with
names of almost all the ministries on its list of permanent clients (see Exhibit 2). In addition, the low
advertising budgets of most local firms also contributed in enhancing the market share of its modestly
priced services. As a result of Affluent’s success in Pakistan’s advertisement industry, as well as the
familial ties of all the branch heads with the founding member, all subsequentbranches of the company
inherited the same basic design elements.
In 2000, Iftikhar Arshad transferred the leadership of his personally managedKarachi branch to his son,
Intisar Arshad, who had just completed his postgraduate studies in the West. Intisar had recently earned
his second masters degree in business.The Karachi branch thrived under its new leadership with revenues
reaching theirrecord highest in 2002. Its number of employees almost doubled from 100 to 197 within the
span of these two years. Soon after, however, the downfall began and the lowest revenues in Affluent’s
history were reached within a span of three years. This was largely due to more intense competitive
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2. pressure from new entrants (that is, international advertising agencies) who were aggressively expanding
their operations in Pakistan by luring talent away from Pakistani advertising agencies with offers of more
rewarding and professional work environments.
AFFLUENT KARACHI: RESPONSES TO ENVIRONMENTAL CONTINGENCIES
To operate more effectively against the new players, Intisar decided to bring aboutthree major changes
within his branch design. First, to effectively cater for market share loss, he established a production
department and held it responsible for audio and video recordings of electronic advertisements. Second,
Intisar set in place a Webdesigning department to take care of both, demands for Web advertisements and
complete website designing. Together, these changes were to cater to and build on the electronic media
market. Finally, the in-house failure to alleviate turnover andemployee satisfaction concerns led Intisar to
hire human resource management professionals along with a Senior Director, Zaheer Ahmad, to head the
Human Resource Management (HRM) department. Zaheer had twelve years of experience in the field,
and was credited for introducing some cutting-edge HR systems in his earlier workexperiences. However,
neither he nor his assistant mangers had any prior experience in the advertising industry.
HRM SYSTEM DEVELOPMENT AT AFFLUENT
Immediately after joining Affluent, Zaheer along with his two assistant managers, spent a great amount of
time in studying the prevalent organizational systems and trying to understand the internal causes of
employee dissatisfaction and turnover. Several issues discovered by them are included in the following.
Departmental Intolerance
Affluent Karachi was faced with an implicit tussle and intolerance between three of its principal or line
departments, that is, client services (CS), creative and graphicdesigning.
Following are some comments by several members of these departments:
The CS people bring incomplete and sometimes misleading information regarding customer demands.
Not surprisingly, then, the advertisement copy that the team prepares tends to come back for revisions
and then the department is blamed for delay in delivery and cost increase.
(Creative Department Head)
We are hardly ever told about the preferred shapes, colors or expected theme of print ads required by
the customers. This is of course the duty of the CS department. But they aren’t the only culprits. The
creative people also revise their copies twice or thrice. Obviously then our designs need corresponding
changes and new ads require reprinting and re-pasting. But it is not our fault that the costs are rising
up. Why should we then take the blame for somebody else?
(Senior IT Manager, Graphic Design Department)
Customers are never sure initially about what exactly they require. Asking a lot of questions offends
them, sometimes to an extent where they directly tell us that it’s our job to decide and come up with
appropriate ideas. Another problem is that we aren’t assigned customers on permanent basis and our
previous knowledge regarding client preferences ends up lost or forgotten.
(Client Services Manager)
On the basis of these interviews, the newly established department forwarded a proposal of structural
change within the organization. According to the proposed structure, each member of the CS, creative and
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3. graphic designing department was assigned the long-term responsibility of dealing with a particular client.
Thus, within eachdepartment there was a member responsible for meeting the requirements of, say, the
Ministry of Health. This structural arrangement implicitly tied members of the three departments into
various teams. Each team was to include two membersfrom the creative department and one from the
other two. Furthermore, one member of the creative department was also going to accompany the CS
executive in the initialstages of the new campaigns.
Absence of Job Descriptions and Training Opportunities
Interviews with several employees throughout the branch exhibited an overall dis-satisfaction with the
absence of job descriptions. According to a junior CS executive:
I hardly know what my job is. When I joined I was given a thick manual of SOPs. It had everything
except my job outline. This void grants managers and executivesto use us at their convenience.
Sometimes I have even been asked to pick up lunch from a restaurant.
To overcome this issue, the HR department, under the leadership of Zaheer, set out to prepare specific
job descriptions and thus, eradicate any confusion about what one was required to do. These job
descriptions were designed idiosyncratically for eachhierarchical level of each department after
conducting interviews and an organization-wide survey. Multiple people were interviewed for each job
description.
On the basis of these job descriptions, several in-house training sessions were also designed to develop
soft skills, for example, team building, time management, conflict management and resolution and stress
management. Some externally offered courses on core organizational issues such as CS orientation,
effective presentation making and computer programming were also recommended. Each department was
required to attend quarterly arranged in-house sessions. Additionally, members of any onedepartment
were to be selected, according to their turn, for external trainings every month.
Compensation-based Concerns
At Affluent Advertising, salary distribution was generally unpredictably delayed for 10–20 days. This
was a major source of dissatisfaction and complaints, especially forthose individuals who were low in
hierarchy and whose salary amount did not grant them the leverage to extend expenditure. Particular
concerns for these employees were frequent embarrassments related to the payment of house rent and
children’s school fee, which even made them willing to switch jobs for the same salary level, only if they
could be paid on time.
At the middle level of employee hierarchy, there also existed a dominant feeling of internal and
external compensation inequity. The star performers believed theirefforts were not being rewarded and
that they were consistently being paid less than the average performers on account of joining the
organization later than them. WhenIntisar was approached by Zaheer, in this regard, his response was the
following:
That’s not the real issue. Actually our competitors approach these inexperienced lads and offer jobs at
exactly twice their present salaries. Naturally, they leave. But why should we disappoint our loyal and
committed workers for this lot of uncommitted opportunists? We should not.
To resolve this dilemma, the HR department designed appraisal systems that built on corresponding
job descriptions. These appraisals included a mix of traits, goals and competencies required for each job
cadre. The exact percentage mix varied a little based on the exact nature of job. For example, business
development and mediabuying departments had a greater percentage allocated to goal achievement than
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4. the administrative or accounts departments, where a greater percentage was allocated to competencies.
The average percentage allocated to each section was 15 per cent for traits, 35 per cent for goals and 50
per cent for competencies.
Appraisals were to be held on a quarterly basis by the department heads, after which employees were
sent a copy of their evaluations. This was followed by self-evaluations and counter arguments. Finally,
each employee was to meet with the departmenthead, in person, and have a personalized discussion
regarding performance gaps and improvements. Goals for the next quarter were also mutually decided
during this meeting. The appraisals for the top management team and department heads were to be carried
out by Intisar, while HR managers also collected informal or anonymousfeedback through their respective
subordinates.
On the basis of individual rankings, a merit-based bonus plan was designed, which was to replace the
existing annual increment system. According to the plan, thosereaching a mark of excellence, in the
quarterly appraisal, were to be eligible for a bonus amount equal to 80 per cent of their monthly salaries.
The amount for those making it to goodandabove averagecategories of performance was 50 per cent and
25 per cent of monthly salaries, respectively.
Finally, in light of the newly carved job descriptions and compensation plan, a credential-based
rigorous selection criterion was also devised to replace the earlier patronage-based selection and informal
recruitment through internal sources. The candidates were first interviewed on telephone to check
presence of mind and sharpness.This was a sort of quick elimination round. Those who passed were
called for a written test in which they were given short cases based on an advertising agency. Here,
thecandidates were to narrate what they would do if they were in the shoes of the case character. Towards
the end of the test, candidates for the core departments were also asked to design a campaign comprising
a logo, slogan and radio or print advertisements for given client requirements. Those who passed the test
were asked to prepare a 10-minute presentation, within 24 hours, on the campaign they had designed.
Theselected candidates were finally called in to discuss their salary package and how they could earn
above industry standards on the basis of their performance.
After finalizing these structural changes, a report was sent to the CEO for approval.It took the HR
department about ten months to prepare the first draft of the proposedreport.
GRIEVANCE-VOICING MECHANISM
A lack of grievance mechanism was a largely held gripe in Affluent. Employees expressed a need to voice
their opinions anonymously. When asked for the reason behind this anonymous grievance registration, a
female graphic designer replied:
Several of my colleagues made the mistake of publically raising their concerns, in the past. They were
all terminated within a span of two months on trivial grounds; one simply because she was often seen
with a male colleague at the lunch table. The guy is still here because he hadn’t voiced any public
grievance.
To overcome this issue, the HR department arranged several complaint boxes. One was hung in the
lunch room and others at the entrance of each floor.
Alteration in Administrative Policies
The newly established HR department extended its list of policy recommendations to include policy
statements for frequent absenteeism and leave, late arrival, deliberate prolonging of clients’ visiting time,
demand of unreasonably high fuel charges for client visits, unacceptably high mobile usage in the name
of CS, recurrent loan applications, etc. These policy statements are illustrated in Exhibit 3.
The suggested leave, absenteeism and late arrival policy did not accommodate any absences without
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5. salary deduction. However, it did allow two paid leaves, at maximum, per month. The leave application
earned consideration only if it was submittedtwenty-four hours in advance. All unavailed leaves could be
encashed at the end ofthe year. Finally, any late arrival after 9:15 a.m. was counted as absenteeism.
According to the transport and fuel policy, CS executives were allocated a weekly fuel expenditure of
Rs 700. This was regardless of the number of visits made to different clients or the nature of relationships
shared with them. The executives were to maintain a record and minutes of their client visits and justify
the time expended if so desired by the administrative department.
Akin to the transportation disbursements, a fixed chargeable amount of Rs 500 per month was
authorized for the CS executives on account of mobile usage. For employees of all other departments, the
figure was reduced to Rs 200. Any bill amount exceeding this limit was deductible from the salary of the
concerned employee.
Further, a loan policy was introduced which prohibited any loan grant above 200 per cent of the salary
amount. The loan had to be returned, through salary deductions, within a maximum period of 4–6 months.
Lastly, a second loan could not be applied for before the previous one was cleared.
In addition to the above mentioned recommendations, HR department also drafted a policy statement
for overtime, which recommended monthly payments for all hoursspent on the job after 6:00 p.m., if
approved by the employee’s department head. Finally, a printing policy was also forwarded that restricted
the printing facility tothe graphic design, creative, HR and accounts departments only. While the latter
twowere granted unlimited access, the creative copywriters were allowed only four text pages of black
and white prints per copy. Similarly, the graphic designers had to suffice with two black and white image
printouts during intermediary stages of advertisement development. A third one was tolerable, but worth
high discouragement from supervisors. Color printouts were allowed for final versions of print
advertisements only.
RESPONSE TO HR DEPARTMENT’S INITIATIVES
Chief Executive’s Response
Intisar asked each department head to ensure a common job description for all hierarchical levels of a
given department. Additionally, he alsorecommended a uniform appraisal form for the entire organization
(see Exhibit 4). This form was to be filled by the assistant HR managers, instead of the department
heads.The employees were to be kept in the dark about their evaluations. Only the bonuses and
promotions, distributed by Intisar, were to be announced, if any. A lunch or teaceremony of two hours
and thirty minutes was to be arranged for this purpose, by the administrative department, in a specially
booked banquet hall of good reputation. When such arrangements were not possible, catering services
could be employed inthe executive meeting hall. In either case, choice of hotel or caterers was subject to
voting between the options presented by the administrative department. Attendance was a must for all
white-collar employees, though exceptions could be granted to the top management team. Blue-collar
employees were excluded from the event.
The selection mechanism was also altered. At the present time, most of the new-comers came through
acquaintance with Intisar’s family. They were neither interviewed nor tested, rather called only for a
meeting with the HR managers. This meeting wasmore often ceremonial, in which their salary was
decided and introduction to their department head made. Further, the recommendation for external
training sessions was rejected, on account of lack of budget. In-house training was approved, which the
HR managers were to design without any raise in base salary or bonus earning. Finally, it was left to the
department heads to shape the on-the-job training track of their employees, observe their progress and
assign clients and goals accordingly.
In terms of the administrative policies, the overtime recommendation was overruledstraight away,
while the transportation, printout, leave, absenteeism and late arrival policies were assumed without any
delay. The loan policy was accepted but with an added condition of signing a legal document before
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6. approval of the loan, stating the date of return (see Exhibit 5). The mobile usage policy was altered from
monetary to free-minute allocation (see Exhibit 6). These newly decided policies were communicated to
the administrative department for implementation.
Intisar and his top management team, that is, the department heads (other than the HR director), also
kept the leverage to terminate any of the employees at any time. Thedecision, however, was to be
communicated by the HR managers, who had to frame itin the previous performance appraisal held by
them. Often the HR managers were alsodirected to ask the employee to submit his resignation rather than
directly terminating him. The remaining dues of the leaving employees were not immediately cleared and
a couple of months could pass before final clearance from Affluent. This ensured that they could not blow
whistles or exhibit explicit resistance against the decision.
Lastly, Intisar announced several one-day outdoor trips and dinner ceremonies such as Iftar, Eid
Millan, etc., to control employee turnover and dissatisfaction.
Exhibit 1
Original Structural Configuration at Affluent Advertising (Pvt.) Ltd
Source: Company documents.
Exhibit 2
List of Major Clients of Affluent Advertising (Pvt.) Ltd
Pakistan Tourism Development National Database and Registration
Corporation Authority (NADRA)
Malir Development Authority Ministry of Information & Media
Development
Central Board of Revenue Pakistan Post Office (Airex, UMS, LPS,
Datapost and Other Services)
National Highway Authority National Highways and Motorway Police
Lahore Development Authority Ministry of Health
Central Directorate of National Saving Askari Leasing
University of Punjab Bahria Town
Capital Development Authority National Reconstruction Bureau
Board of Investment Gwadar Golden Palms
Eden Developers Pakistan Ordinance Factories
Haleeb Ltd Election Commission of Pakistan
D.G. Cement Pakistan Telecommunication Company
Limited
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7. Comsats Institute of Information First Women Bank Ltd
Technology (CIIT)
Securities and Exchange Commission of Pakistan State Oil (PSO)
Pakistan (SECP)
The Bank of Punjab Shezan International Ltd
Oil and Gas Development Company Mecca Cola Beverages Pvt. Ltd
Limited (OGDCL)
State Life Insurance National Engineering Services Pakistan
(Pvt.) Limited (NESPAK)
Export Promotion Bureau Privatization Commission
ZaraiTaraqiati Bank (ZTB) Ltd Pakistan International Airlines (PIA)
Muslim Commercial Bank (MCB) Ltd Water and Power Development Authority
(WAPDA)
Source: Company documents.
Exhibit 3
Suggested Policy Statement for Loan Grant, Absenteeism and Mobile Usage
To: Chief Executive Officer
Subject: Suggested New Loan Policy
Dear Mr Intisar,
Based on our earlier exchange of ideas, I hereby propose that the following conditions be included inthe new loan policy being
introduced at Affluent:
The loan amount requested must be in accordance to the salary structure of the employee and recoverable within 6
months, through deduction from salaries.
No loan amount greater than the sum of two months’ salary will be approved.
The employees have to present documented evidences of the genuineness of their request. A second loan cannot be
applied for if any previous loan is unsettled.
No more than two loans can be applied for, per year.
The loan amount does NOT ensure job security. If an employee resigns/quits or gets terminated after taking a loan, the
remaining sum will have to be returned within a period of one month, failing which he will be subjugated to legal action.
In addition, our department also suggests the following stances to appropriately manage the soaring rate of absenteeism and leave
at Affluent:
No absenteeism should be allowed without salary deduction.
A 45-minute delay, beyond official arrival time of 8:30 a.m. should be counted as an absenteeism deserving
of salary deduction.
No more than two leaves should be granted, per employee, per month.
Any unavailed leave should be compensated monetarily equal to one day’s salary, at year’s end. The leave application
must be submitted 24 hrs beforehand, for being eligible of grant.
Finally, it is also suggested that a fixed sum of money be allotted to individuals, on account of mobile usage based on
departmental needs. Thus, a sum of Rs 500 seems sufficient for the CS department, while Rs 200 should suffice for members of
all other departments.
Zaheer Ahmad, Director HRM
Source: Company documents.
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8. Exhibit 4
Individual Evaluation Form
Part A: Personality Traits (15%)
Instructions
Please use the below mentioned rating scale to evaluate the individual’s behavioral traits. All traits are from organizational
perspective, especially trustworthiness.
Rating Scale
0 Poor
1 Bare minimum level
2 Above average
3 Good
4 Excellent
Performance Competencies Weightage (W %) Rating (R) Net Result (W%∗R)
1. Professional Integrity and Honesty 2
2. Commitment and Loyalty 5
3. Resourceful/Helpful/Cooperative 3
4. Charisma/Personal Aura/Source of 3
Inspiration and Motivation
5. Neatness/Hygiene/Workplace Condition 2
Part B: Goal Attainment Evaluation Form (35%)
Instructions
Rate the evaluatee’s performance based on the actual achievement of goals assigned. Multiply this rating with the weightage
and calculate the weighted score for each goal.
Rating Scale
0 Poor
1 Bare minimum level
2 Above average
3 Good
4 Excellent
Actual Weighted
Key Goals Weightage % Target Achievement Rating Rating
Applicable for CSD
Increase revenue from existing 15
customers
Decrease cost of service 5
Number of visits to clients· 5
(Exhibit 4 continued)
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9. (Exhibit 4 continued)
Actual Weighted
Key Goals Weightage % Target Achievement Rating Rating
Recovery targets for accounts 10
receivable
Applicable for Creative
Increase revenue from existing 15
customers
Decrease cost of service 5
Numbers of ads approved 10
Applicable for Media
Decrease cost of service 20
Number of jobs handled 10
Credit period from creditors 5
Applicable for Admin & Finance
Decrease cost of service 15
Time taken to generate reports 10
Time taken to update records for 10
accuracy
Part C: Performance Behaviors (50%)
Performance Competencies Weightage (W%) Rating Net Results (W%*R)
1- Communication and Presentation Skills
Oral and written comprehension
Language structuring and vocabulary
Convincing power to sell an idea
through articulate, sell and defend concepts
‘You Attitude’
Adapting presentation style according to 15%
requirements
Level of being respectful/considerate/
mannerly/enduring
Restrains emotional impulses
Responds calmly
Listening actively and responding sensibly
Effective use of empathy
Effectively planning, prioritizing and
sequencing events to meet deadlines
(Exhibit 4 continued)
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10. (Exhibit 4 continued)
Performance Competencies Weightage (W%) Rating Net Results (W%*R)
2- Relationship Building and Networking
Client insight and intuition; the ability to 15%
intuit/anticipate the clients needs, read
between the lines and design/create value
added solutions and relationships
Research-based knowledge of own and client
business
Clearly narrating requirements to (internal/
external) individuals
Keeping status checks and maintaining
coordination till projects assigned are
completed
3- Personal and Corporate Effectiveness
Professional confidence
Result orientation
Commitment to learning
Organizational awareness 10%
Knowledge of skills relevant to job
Active participation in brainstorming sessions
4- Punctuality/Observance of Work Hours 10%
Total Rating Points (b) = ________
Overall Rating
0–99 100–199 200–299 300–399
Below Average Above Average Good Excellent
Remarks
____________________________________________________________________________________________
____________________________________________________________________________________________
____________________________________________________________________________________________
____________________________________________________________________________________________
____________________________________________________________________________________________
_________________________________________________________
Signature HR Manager: _________ Signature Supervisor: _________
Source: Company documents.
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11. Exhibit 5
New Loan Policy
To: All Organizational Members
From: Chief Executive Officer
Subject: New Loan Policy
Dear all!
This is to inform you that a new loan policy has been devised by The Company and states as under:
The loan amount requested must be in accordance to the salary structure of the employee and recoverable within 6 months
through deduction from salaries.
No loan amount greater than the sum of two months’ salary will be approved.
The employees have to present documented evidences of the genuineness of their request. The employees must sign
a contract stating the promised period of return.
A second loan cannot be applied for if any previous loan is unsettled. No more than two
loans can be applied for, per year.
The loan amount does NOT ensure job security.
If an employee resigns/quits or gets terminated after taking a loan, the remaining sum will have to be returned within a
period of one month, failing which he will be subjugated to legal action.
Source: Company documents.
Exhibit 6
New Mobile Usage Policy
To: All Organizational Members
From: Chief Executive Officer
Subject: Revised mobile usage policy
Dear all!
This is to inform you that company has restructured the cell-phone packages and allowed and assignedcertain free minutes to
each organizational member, according to their anticipated mobile usage. According to the new policy:
1. The company will only pay for the line rent and tax charges for each employee’s mobile usage cost.
2. Within the free minutes allocated to each employee, he/she will NOT be charged additionally and NO deductions will be
made from salaries.
3. If an employee exceeds his/her mobile usage limit, s(he) will be responsible for the payment of additional charges, failing
to do so will result in disciplinary action.
PS: MrShabbir of Accounts Department has a list of free minutes allocated to members of differentdepartments.
Source: Company documents.
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