The Fundamental Role of Planning: Departments of Mauritius Commercial Bank

Planning is often called the primary management function because it establishes the basis for all other things managers do as they organize, lead and control. It involves two important aspects: goals and plans. Goals are desired outcomes or target while plans are way that tell managers about the performance of planning.

MCB (Mauritius Commercial Bank) which is one of the best financial institute spend most of its time on planning to achieve positive financial results - higher profits, high return on asset and so forth. MCB using management by objective (MBO) for planning instead of using traditional goal setting. MCB uses MBO to motivate its subordinates as well they hold a weekly meeting for the discussion and to motivate them.

Planning play a vital role in every departments of MCB. Some important departments of MCB are: 

• Risk management department
• Finance department
• Consumer banking department
• HRM department
• Credit risk department

Let us discuss how planning affects these departments of MCB:

Risk Management Department

In MCB, planning is mostly held by top managers or executives. A manager make strategic plan to recognize whether MCB current business model will survive further or not, identify the risks to the bank.

Through this strategic planning most managers of MCB address these risks by refining and modifying or even creating a new business model. MCB have a target risk profile as a parameter for strategic planning which means it have an articulation of organizations appetite of risk -an outline of risks that organization can accept and those it cannot accept

Businesses should set objectives and strategies only after thinking carefully about where you are, what is happening around you, and what may happen in the future. These objectives and strategies should then be executed on, with an eye kept on what is happening as you progress on that may affect the success of your journey. Mcb follows the McKinsey model in planning process. This is a critical step to make sure risk managers understand the business logic behind each objective and helps make risk analysis more focused.

Finance Department

Like every organization, MCB goals for finance department include strategic budgeting, constant containment, cash flow management, debt servicing, and tax plane and accurate record keeping.

• Budgeting and Projecting: the main goals Of MCB should be to create & monitor not only Overall MCB's budget, but a variety of functional or departmental budgets, as well. Budgeting requires research to estimate accurate revenue levels based on demand forecasting. Mcb use annual budget projections to set targets for profit goals and for overhead and production spending levels. It Create monthly or quarterly budget variance analyses to see if MCB is on track with revenues and spending or if need to make changes before expenses get out of hand.
• Cost containment and purchasing management: to get best quality at the cheapest rate of materials, supplies and service, the finance department should perform its duty inn a well manner.
• Cash flow management: MCB make receivable management a key role of its finance department. MCB plans to avoid its most of the risks that’s why they also create reserves for bad debts. 
• Debt Service and Credit Use: letting your debt get out of control can have serious long-term impacts on your business. MCB keep an eye on credit use, including interest amounts generating, the scheduling of payments and the status of credit report and scores.
• Proactive Tax Planning: MCB use proactive strategies to lower its tax burden, such as depreciating assets and offering voluntary benefits to employees that help to lower payroll taxes.

Consumer Banking Department

Retail banking, also known as consumer banking, is the typical mass-market banking in which individual customers use local branches of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards and certificates of deposit (CDs)

“Most financial institutions are still trying to attract all consumers with all things financial,” says Mark Weber, CEO and Chairman at Weber Marketing Group. Instead of “trying to acquire everyone in the market,” he says institutions must be developing greater data literacy in order to better identify and target those consumers who represent the most potential. But MCB plans and have done market segmentation in order to target the right person at the right time

Following are few Strategic goals of MCB:

• Promote Public and Industry Confidence: promote public and industry confidence in the financial service and licensed professional system through the rule-making, examination, and auditing processes.
• Enhance the Oversight Process: enhance to monitor and evaluate internal and external conditions, address industry trends, and ensure fiscal integrity.
• Maximize Personnel Productivity, Professional Development, and Subordinate Satisfaction: improve efficiency and effectiveness of the Division through staff training and utilization of current technologies
• Customer service strategies: MCB emphasizing customer service need strategies that cultivate atmosphere from top to bottom. Such strategies involve giving customers what they want, communicating effectively with them and providing employees with customer’s service training. Manager should know what’s going on with customers .it is also important to let customer know what's going on with company that might affect future decision.
• E-business strategies: managers uses e-business to develop a sustainable competitive advantage. MCB tries to offer products to perceive and value as being unique. MCB use internet based Knowledge system to shorten customer response times, provide rapid online responses to service requests.

MCB also targets a narrow market seen with customized product. In short MCB is a click and brick firm that uses both online and traditional standalone location.

HRM Department

Human resource management (HRM or HR) is the strategic approach to the effective management of people in an organization, so that they help the business to gain a competitive advantage. It is designed to maximize employee performance in service of an employer's strategic objectives

Strategic management process

Although the first four steps describe planning, even best strategies can fail if management doesn't implement or evaluate properly, the process is as follows:

1. Identify the organization current mission, goals and strategies
2. Doing an external analysis
3. Doing an internal analysis
4. Formulating strategy
5. Implementation of strategy
6. Evaluation of results
7. MCB uses this six step process in its HRM department to increase its productivity

Credit Risk Department

Credit risk management is the practice of mitigating losses by understanding the adequacy of a bank’s capital and loan loss reserves at any given time – a process that has long been a challenge for financial institution.

The process of credit risk management includes:

• Credit Application: to be effective, ask each customer to complete the credit application form as these facilitates you to use these information to do better analysis of the clients.
• Assess Creditworthiness: you get hands on the clients information through credit application, the next step you do is you may use these information and various other assessment tools to know whether the limit requested is acceptable or not. These way you know your client even more closely.
• Setting realistic credit limit and its terms: you must manage terms which are common for establishing healthy payment through your customer. You can do through customer’s creditworthiness, offsetting the risk with upfront payment and by the use of the letter of credit or setting shorter payment due dates.
• Making clear worded contract: the clear worded contract act as a great preventative sale contract for managing credit. With identification of the obligation of every party will eventually minimize the risk of dispute.
• Always follow and establish debt collection policies: to adequately improve the process divide the responsibilities amongst the sales staff and credit manager to avoid any conflict. You should always maintain accurate records including purchase orders, invoices and correspondence.

Mcb uses this effective credit management process to mitigate its risk.

Conclusion

In planning managers define goals, establish strategies to achieve them and developing to integrate and coordinate activities. Planning provides direction to managers as well as nom-managers. Moreover, it reduces uncertainty and in addition planning minimizes waste and redundancy. MCB has its own strategy of planning that helps them grow and develop the organization. The way they choose to follow for success can be a great example for other companies.