Hrm practices in Bangladesh free essay sample

In the age of knowledge economy, human resource is considered as the most important resource of the organizations and it became decisive for success of any organization (Moyeen Huq 2001; Schuler 1990; Werther Davis 1996). Human resource management (HRM) refers to the policies and practices including human resource planning, job analysis, recruitment, selection, orientation, compensation, performance appraisal, training and development, and labor relations (Dessler 2007). The purpose of human resource management is to improve the productive contributions of employees and provide competitive advantage to the organizations (Werther Davis 1996). It is well recognized that an organization enriched with committed, motivated, talented, and competent human resource can achieve any kind of challenging goals. Success of managers in the new century would absolutely depend upon their capabilities in managing human resources (Budhwar Debrah 2001). McClelland (1961) questioned, â€Å"Why should Argentina lag so far behind the United States or Australia in per capita? Is it so much less favored by climate and natural resources? †. We will write a custom essay sample on Hrm practices in Bangladesh or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page In answering the question it is conceived that economic development does not depend on the supply of natural resources, rather it depends upon the effective and efficient utilization of resources (Azim 2008). If resources are used properly, productivity would be increased, which will lead to lessened cost and increased profit. If profit increases, organizations will be able to offer better compensation, training, and working environment for the employees. It will also enhance the job satisfaction and organizational 1 Associate Professor, School of Business, East Delta University, Chittagong, Bangladesh, Email: [emailprotected] com 2 Bang College of Business, Kazakhstan Institute of Management, Economics and Strategic Research (KIMEP), Almay 050010, Kazakhstan, E-mail: [emailprotected] kz Absar Mahmood commitment of the employees, which will in turn lead to further improvement of productivity. Therefore, productivity has been a great concern for every organization of developed and developing country. Human resource management practices can contribute to superior productivity directly by finding better and more efficient ways to achieve objectives and indirectly by improving the quality of work life for employees (Werther Davis 1996). Effective HRM practices can achieve high productivity and corporate financial performance, low scrap rate, and low employee turnover (Arthur 1994; Huselid 1995). Proper human resource management practices such as incentive pay, teams, flexible job assignments, employment security, and training can improve productivity enormously (Ichniowski, Shaw Prennushi 1997; Katou Budhwar 2007). In developing countries, the scenario of HRM is quite unimpressive except in Taiwan and South Korea, where HRM is linked to the formulation of business strategy (Budhwar Debrah 2001). Both the countries, South Korea and Taiwan, have excelled in industrialization. Although Taiwan lacks natural resources, it has accelerated its economic growth by the means of effective human resources management practices (Huang 2001). A case study (Pollitt 2004) analyzing the HRM practices of Nokia Corporation, the leading manufacturer of mobile phones in the world, stated that the HRM practices of Nokia played vital role in helping the company in reaching its 40% percent share of the global handset market, and industry leading profit margins of 20% 25% at a time of unmatched change and competition. It is also reported that, Nokia Corporation? s share of the Finnish GDP was 3. 5% in 2004. Noe, Hollenbeck, Gerhart and Wright (2007) uttered, â€Å"To compete in today? s economy, whether on a local or global level, companies need to provide a quality product or service†. Sound HRM practices can also help in this regard (Katou Budhwar 2007). It is found that HRM practices have significant positive impact on the implementation of TQM, which would ultimately enhance employee and customer satisfaction (Yang 2006). Through an in-depth study on 178 industrial enterprises of Greece; Katou and Budhwar (2007) found that HR practices such as recruitment, training, promotion, incentives, benefits, involvement, and safety and health were positively related with the elements of organizational performance such as innovation and satisfaction of stakeholders. They also found recruitment as the most powerful HR practice in achieving sustainable competitive advantage based on human capital. Further, employee selection has momentous influence on organizational performance (MacDuffie 1995; Shipton et al. 2005). Employee selection is also associated with perceived market performance (Delaney Huselid 1996). Next, employee training and development has enormous impact on organizational effectiveness. It is observed that more investment in training and development has led to more profitability of the private sector industrial enterprises of Bangladesh (Hoque 1994). Thang and Buyens (2008), after reviewing 66 studies conducted in different countries, concluded that training leads to improved knowledge, skills, abilities, attitudes, and behavior of employees that ultimately enhance excellent financial and non-financial 119 Absar Mahmood performance of the organizations. Moreover, Mexican companies consider employee training and development as their sources of competitive advantages to face the challenges of globalization (Ruiz Germain 2008). In addition, training activities have noteworthy influence on employees? organizational commitment in manufacturing firms in India (Agarwala 2008). Distinctive HRM practices have enabled Japan in becoming one of the most industrially developed countries of the world through creating competitive advantages (Hoque 1990; Mohiuddin Mahmood 1999). Besides, HRM practices of China have contributed a lot in turning the country into an economic power of the world within five decades (Warner 2001). Then, employee compensation, especially the performance based compensation system, resulted in better organizational performance in Indian firms (Singh 2004). In Chinese firms, HRM practices were found to have significant influence on employee affective commitment (Yu Egri 2005). Hence, it is evident from the above discussion that the role of human resource management practices towards improving organizational performance in every part of the world, from developing countries to developed countries, is time-tested. Now the world is more competitive than ever. Due to emergence of global village, this competition has become more severe. To survive in the era of fierce competition, industrial enterprises need to create sustainable competitive advantage based on human resource management practices (Barney 1991; Khandekar Sharma 2005). In today? s world, the central challenge that a country faces is the continuous improvement of the performance of its organizations, both of public and private sectors (Khan 2007; Werther Davis 1996). Due to flow of globalization, trade liberalization, unparalleled recession, and technological breakthroughs; industrial enterprises of Bangladesh are under tremendous pressure to improve productivity, quality, innovation, and overall effectiveness. Historically, Bangladesh is an agro-based country. More than 50% of its population is employed in agriculture (Ministry of Finance, GOB 2007). However, the contribution of agriculture to the GDP has shown declining trends in recent years (Bangladesh Bureau of Statistics, GOB 2007). As possibility of growth in agriculture of Bangladesh is constrained by a number of social, economic, and physical reasons such as small land-man ratio, natural calamities, and rapid urbanization; the need for the development of industrial sector has been obvious (Aowrangazab 2005). Low growth in agriculture has created tremendous pressure on industrial sector through the influx of surplus laborers from agriculture to industry. The unemployment problem of Bangladesh, one of the populous nations of the world, will be further deteriorated until and unless industrialization through labor intensive manufacturing enterprises is accelerated. In 1971, Bangladesh started its journey as an independent and sovereign nation. During that time only 4% GDP came from industrial sector, most of which were mainly small scale industries (Ahmed Patan 1979). The socialist prone philosophy and huge immobilized abandoned industrial units of the non-Bengali communities led the nationalization of industries soon after the independence. 120 Absar Mahmood The investment policies of 1973 and 1974 gave further emphasis on public sector oriented industrialization and were in against of the expansion of the private sector. Nevertheless, the public sector industrial enterprises, unfortunately, did not perform well. Rather, they have been emerging as a white elephant through incurring huge losses in every year (Abedin 1988; Hoque 1994; Khan Alauddin 1995). On the other hand, from December 1975 to till now all the governments have been emphasizing on the development of the private sector industrial enterprises through the investment policy of 1975, and industrial policies of 1982, 1986, 1991, 1999, and 2005. However, it is also found that the performance of the private sector industrial enterprises has not also achieved ultimate success (Aowrangazab 2005; Khan 2007; Khan Alauddin 1995; Sikder, 1996). A number of issues are liable for such state of affairs in the public and the private sector industrial enterprises of Bangladesh where ineffective HRM practices are reported to be one of them (Ali 1989; Ather Solaiman 1995; Chowdhury 2000; Hoque 1994; Islam 1982; Khan 2007; Rahman 1984; Shelly 1994; Sikder 1996; Taher 1992). Regardless its problems, Bangladesh have tremendous potentialities in some areas. The importance of developing countries (like Bangladesh) is growing rapidly as the suppliers of low-priced resources, buyers, competitors, capital users, and destination of foreign direct investment of MNCs (Budhwar Debrah 2001). Bangladesh has the 7 th largest work force (69 millions) of the world (Ernst Young, MCCCI 2007). The country also has the highest number of soldiers in the UN peacekeeping mission. Bangladesh has been holding one of the top positions with respect to foreign currency earnings from remittance and garments export. Thus, Bangladesh (as cited in Azim 2008), along with South Korea and Mexico, has been included by Goldman Sachs in their Global Economic Paper, 2005 as one of the â€Å"Next 11† countries that have the potential to become global heavy weights and match the dominance of the BRIC countries (Brazil, Russia, India, and China). Therefore, to harness the above mentioned potentialities, the public and the private sector industrial enterprises of Bangladesh need to adopt sound human resource management practices. Beardwell and Holden (as cited in Weeratunga 2003) opined that some countries such as Japan, Germany, and Sweden have immensely developed themselves through emphasizing on human resources properly. They also argued that technological advancement and organizational change have progressively led employers to the realization that success depends on the skills and abilities of their employees, which can only be ensured through effective human resource management practices. Against this backdrop, an indepth study to evaluate the status of HRM practices of the public and the private sector industrial enterprises of Bangladesh can be pertinent and worthwhile. And, therefore, the main objective of our study is to the state of adoption of new HRM practices by public and private sectors organizations in Bangladesh and made some recommendations how it could bring benefits for them in the long-run. 121 Absar Mahmood 2. Research on HRM practices in Bangladesh: A Survey of Literature HRM practices have been researched in Bangladesh from different perspectives. Rab (1991) explored HRM practices of 24 small enterprises operating in Dhaka. He identified that in case of recruitment, personal contact was the primary means (58%) followed by advertisement in newspaper (21%), walk-in (13%), and company notice board (8%). All the enterprises, except one, used work sample test and interview for the selection of employees. On-the-job training was observed to be the most widely used one. Most of the enterprises (87. 5%) paid one or more types of allowances in addition to salary. A case study (Taher 1992) was conducted on the overall personnel management (HRM) practices of Khulna Hard Board Mills Ltd. It discussed about the recruitment, selection, training and development, compensation, labor relations, and safety and health. The researcher unearthed different problems related to personnel management practices of the mill such as conflicts in personnel department, disproportionate span of supervision, inappropriate grade, high rate of absenteeism, antagonistic feeling of local workers, inadequate training programs, lack of skill audit, nepotism and favoritism in promotion and selection of employees, poor industrial relations, inadequate compensation, and poor safety and health services. Shelly (1994) examined the roles of human resources, and infrastructure in the industrialization process of Bangladesh. He observed that ineffective human resource management was one of the major problems faced by industrial sector of Bangladesh. Most of the HRM practices such as HR planning, recruitment, selection, promotion, performance appraisal, compensation, incentives, and industrial relations were not performed properly in industries. Mohiuddin and Mahmood (2001) studied the transformation of personnel management into human resource management. Based on different empirical and theoretical studies conducted in the western world, the authors distinguished between personnel and human resource management. Another researcher (Ahmed 2001) discussed about the linkage between human resource management and corporate strategy. He also revealed that corporate strategies developed by Michel Porter such as cost leadership, differentiation, and focus strategies had significant impact on HR strategies and practices. Moyeen and Huq (2001) studied HRM practices of 92 medium and large business enterprises (public and private sector) located in Dhaka, Bangladesh. They found that only 62% of surveyed organizations had an HR/IR department. About 96% organizations had training programs. 91% of organizations had performance appraisal system and similar percent of organizations had a system of rewarding the good employees. The least prevalent practice among the surveyed organizations was employee pension plan. The researchers inferred that union status (presence of unions) was associated with some HRM practices and firms? size was found as an important predictor of some of the HRM practices. A research study (Mamun Islam 2001) examined the human resource management (HRM) practices of the ready made garments (RMG) 122 Absar Mahmood enterprises. The study emphasized on improving productivity of garments workers through proper HRM practices to face challenges of globalization. They discovered the reasons for the low productivity of laborers such as unsystematic recruitment and selection of workers, unavailability of training facilities, inadequate financial facilities, and low motivation level of workers. Human resource management practices of ten local private manufacturing enterprises listed under Dhaka Stock Exchange (DSE) were examined by Akhter (2002). She covered different aspects of HRM practices of the surveyed manufacturing enterprises such as job description, HR planning, recruitment and selection, orientation, training, promotion, performance appraisal, transfer, salary and wage administration, incentives, and fringe benefits. She also measured correlation between employees? opinions regarding HRM practices in their enterprises and their age, education, and experience. Islam (2003) in a study on the HRM practices of small businesses of Bangladesh found that small businesses did not offer reasonable salaries and benefits, training and development opportunities to their employees. The author mentioned that due to outdated HR practices, the productivity and motivation level of the employees of small businesses of Bangladesh were very low. Haque and Prince (2003) assessed the HR practices such as training, promotion policy, performance appraisal method, and transfer policies of some private manufacturing industries based in Chittagong. They found that the surveyed companies imparted on-thejob training, vestibule training, apprenticeship training, and class room training to employees. They also found that the surveyed companies filled up vacancies through internal movement. The companies had formal performance appraisal system. Again, the companies were found to have no standing policy regarding transfer. An in-depth study (Mahmood 2004) assessed the institutional context of human resource management practices in Bangladesh. The author mentioned that research on HRM did not receive its due attention in Bangladesh. The researcher observed that other than organizational contingencies, the institutional context such as national education and training system, national industrial relations system, regulatory frameworks, and overall societal context had significant influence on the development of HRM practices in Bangladesh. Hossain, Khan and Yasmin (2004) analyzed the nature of voluntary disclosures about human resource in the annual reports of 40 Bangladeshi companies. They found that contemporary Bangladeshi companies, though not mandatory, willingly given various information regarding their human resources in the annual reports. Akand (2006), in a case study, investigated the personnel management practices of Janata Bank. Ernst and Young, and Metropolitan Chamber of Commerce and Industry (2007) conducted a survey on HR practices of more than 50 organizations selected from industries (mainly from the private sector) such as Pharma and Healthcare, FMCG, IT, Telecom, Manufacturing, Finance, NGO, Textile/Garments, and Conglomerates. They thoroughly examined talent acquisition, performance management, people development, compensation and benefits, HR strategy and processes, organizational culture, and HR practices for 123 Absar Mahmood Workmen, staff and other non-managerial employees of the surveyed organization. Uddin, Habib and Hassan (2007) depicted a comparative scenario of HRM practices with respect to the public and the private sector companies of Bangladesh. The study encompassed the HRM practices of Wartsila, one of the private sector power generation companies, and BPBD (Bangladesh Power Development Board), the public sector power generation company. They examined recruitment, selection, training, performance appraisal, and compensation practices of both the firms. The authors concluded that the overall HRM practices of Wartsila very much satisfactory compare to those of the BPDB. Huda, Karim and Ahmed (2007) made a study on the HRM practices of 20 NGOs of Bangladesh. It was identified from the study that the HR challenges faced by the NGOs were shortage of qualified candidates, insufficiency of qualified female candidate, poor academic background of applicants in the suburban and rural areas, and the lack of training infrastructure and training need analysis. The first three challenges were related to recruitment. Two recent studies (Billah Islam 2009; Billah, Prince Islam 2009) found that HR practices have significant association with employee turnover and organizational commitment. The above literature survey on different HRM practices demonstrates that like other developing countries, HRM as an area of research has not received proper attention in Bangladesh. Moreover, few in-depth comparative studies between the public and private sector in this context were conducted by the local researchers. The study is, therefore, an endeavor to fill up this obvious res earch gap. 3. Research Objectives, Hypotheses, and Methodology Although human resource management practices are indispensable in enhancing organizational performance and competitive advantage (Becker Huselid 1998), surprisingly an inadequate number of studies have been conducted in this area so far in Bangladeshi context (Akhter 2002; Mahmood 2004). This still remains an unearthed area for research. Thus, the present study aimed at filling the existing research gap. This study would contribute to the progress of better theory and practice of HRM. The research findings would help the public and the private sector industrial enterprises of Bangladesh in realizing the status of their HRM practices. It would also help them improve their HRM practices towards creating a sustainable competitive advantage based on human capital. The research findings would be also useful for the academicians, researchers, policymakers, and practitioners in recognizing HRM practices in a developing country context such as Bangladesh. The study highlighted the following specific objectives: a) To trace the overall status of adoption of new HRM practices in the public sector industrial enterprises of Bangladesh. b) To trace the overall status of adoption of new HRM practices in the private sector industrial enterprises of Bangladesh. c) To explore the difference between public and private sector 124 Absar Mahmood industrial enterprises of Bangladesh with respect to overall status of adoption of new HRM practices. d) To put forward policy implications for overall improvement of the HRM practices of the public and private sector industrial enterprises of Bangladesh. Based on literature review, objectives of the study and observed present scenario of HRM practices in Bangladesh, we developed the following hypotheses for the study. Hypothesis 1: H0 = The overall status of adoption of new HRM practices in the public sector industrial enterprises of Bangladesh is not moderately satisfactory. Hypothesis 2: H0 = The overall status of adoption of new HRM practices in the private sector industrial enterprises of Bangladesh is not satisfactory. Hypothesis 3: H 0 = There is no difference between the public and the private sector industrial enterprises of Bangladesh with respect to the overall adoption of new HRM practices. Sample A sampling frame of 155 public and private sector industrial enterprises was prepared comprising of 64 public sector industrial enterprises (running) under the six state-owned industrial corporations (Ministry of Finance, GOB 2007) such as BCIC, BSEC, BSFIDC, BFIDC, BJMC, and BTMC, and 91 private sector industrial enterprises (CSE, Annual Report 2007) listed under Chittagong Stock Exchange (CSE). Various established approaches are used in determining sample size such as using a census in case of small population, imitating a sample size of analogous studies, using published tables, and using formulas to calculate a sample size (Israel 2003). For the present study, we used â€Å"Table Method† where published tables for similar studies are suggested to use in determining the sample size. We used the â€Å"table† developed by Israel (2003) using the formula of Yamane (1967), which is presented in Table 1. Table1. Sample size for  ± 5%,  ± 7%,  ± 10% precision levels (Confidence level is 95% and p = 0. 5) Hrm Practices in Bangladesh free essay sample HR practice in Bangladesh is better than the past. In the past, HR role was concentrated to hiring firing and letter issuance-dispatching-filing stage. Now it has started to perform more than that. Such as .. .. Employee motivation, Employee development, employee retention, facilitating organizational development initiatives etc. and thus contributes to the achievement of organizational goals. These value added job has just begun in BD. For a good tomorrow, this is a starting point.Employers have started to understand that the more they invest in human resources they more output is likely which lead them to emphasize on employee capability development. As such in many organizations, employee development is viewed as part of business plan. In these organizations, training budget is calculated as a percentage of total budgets of the organization. Employer Employee relationships is better than the past. Employers now recognize the importance of employee?  ¦s participation in business planning, major decision making and organizational change process. We will write a custom essay sample on Hrm Practices in Bangladesh or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Many organizations now conduct employee opinion surveys for collecting employee feedback and improve employer- employee relationships. Some HR actions have legal implications. But in the country context legal explanation does not seem to be adequate. There is lack of uniformity of the interpretation of law that lead to practice by organizations in different way. There is also ambiguity of existing legal policy or detailed policy framework on HR actions seems to be incomplete.  « In future the overall HR practice is expected to be brighter in Bangladesh because more are feeling the necessity of an established HR department in the organizational structure „ « employer-employee relationship is expected to improve, „ « IT will be part of HR practices which will make HR actions, decision making process faster and accurate 5. Human resource management 5. 1. Human resource planning Square has a personal and administrative Department . Square is one of the biggest employers in Bangladesh. The total number of employers in Bangladesh . The total number of employees is 1,223.For the employees there are systematic in house training in home and abroad . To motivate the employees, along with salary and benefits the company provides various facilities like free meals , free transportation , 24 hour medical center , on site sports . Production and accommodation facilities includes full time supply of safe drinking water, adequate lighting and ventilation facilities from sheet. 5. 2 HR Practices of SQUARE textile Recruitment Training Performance Management Labor relation Employee relation Job analysis Job design Selection Development Incentives Benefits 5. . 1 Recruitment and Selection process in SQUARE Recruitment is the process trough which the organization seeks applicants for potential employment. Selection refers to the process by which it attempts to identify applicants with the necessary knowledge, skills, abilities and other characteristics that will help the company achieve its goals, companies engaging in different strategies need different types and numbers of employees. The strategy a company is pursuing will have a direct impact on the types of employees that it seeks to recruit and selection. Source of recruitmentThere are two kinds of source SQUARE uses for recruitment . They are 1. External source 2. Internal source. We try to discuss all relative sources which are used for recruitment in SQUARE. 1. Internal source SQUARE thinks that current employees are a major source of recruits for all but entry-level positions. Whether for promotions or for ‘Lateral’ job transfers, internal candidates already know the informal organization and have detailed information about its formal policies and procedures. Promotions and transfer are typically decided by operating managers with little involvement by HR department. . 1Job-posting programs HR departments become involved when internal job openings are publicized to employees through job positioning programs, which informs employees about opening and required qualifications and invite qualify employees to apply. The notices usually are posted on company bulletin boards or are placed in the company newspaper. Qualification and other facts typically are drawn from the job analysis information. The purpose of job posting is to encourage employees to seek promotion and transfers the help the HR department fill internal opening and meet employee’s personal objectives.Not all jobs openings are posted . Besides entry level positions, senior management and top stuff positions may be filled by merit or with external recruiting. Job posting is most common for lower level clerical, technical and supervisory positions. 1. 2 Departing Employees An often overlooked source of recruiters consists of departing employees. Many employees leave because they can no longer work the traditional 40 hours work week . School, child care needs and other commitments are the common reason.Some might gladly stay if they could rearrange their hours of work or their responsibilities . Instead, they quit when a transfer to a part-time job may retain their valuable skill and training. Even if part-time work is not a solution, a temporary leave of absence may satisfy the employee and some future recruiting need of the employer. 2. External source When job opening cannot be filled internally, the HR department of SQUARE must look outside the organization for applicants. We discuss all the external source of recruitment at bellow: 2. 1 Walk-ins and Write-ins:Walk-ins are some seekers who arrived at the HR department of SQUARE in search of a job; Write-ins are those who send a written enquire . both groups normally are ask to complete and application blank to determine their interest and abilities. Usable application is kept in an active file until a suitable opening occurs or until an application is too old to be considered valid, usually six months. 2. 2 Employee referrals: Employees may refer job seekers to the HR department . Employee referrals have several advantages . Employees with hard –to –find job skill may no others who do the same work.