Abstract
The aim of this study is to assess current HRM practices in Bangladesh, as well as the future challenges the country faces. Based on secondary sources, we explain the institutional contexts of the four main generic HRM functions: recruitment and selection, training and development, pay and performance appraisal and industrial relations practices. Here, we also highlight recent developments and future challenges with regard to HRM practices. While credible research on HRM practices in Bangladesh is still rare, this study will be beneficial to researchers and HRM practitioners interested in Bangladesh and other developing countries and, we hope, will encourage future research.
Introduction
Since gaining independence in 1971, Bangladesh has been progressing gradually towards its dream of a hunger and poverty free society. Initially, the government of Bangladesh followed a socialist economic model. As a result, the government and policymakers did not prioritize issues such as private sector development, industrialization, competitiveness and human resource management (HRM). However, after shifting its economic policies from socialism to a free-market economy in the early 1990s, Bangladesh achieved commendable economic growth and now has an industry contribution to GDP of about 28.5 per cent (ILO, 2013; PwC, 2015). Bangladesh is predicted to become the world’s 23rd largest economy in terms of PPT by 2050, and has been included by Goldman Sachs in the N-11 countries (Chowdhury & Mahmood, 2012; PwC, 2015). To become a middle-income country by 2021, given the country’s limited natural resources and abundance of human resources, the efficiency and efficacy of HRM practices could be pivotal and driving forces for Bangladesh’s economic development (Absar, 2014).
However, the current state of HRM practices is far below the level Bangladesh needs to achieve. Most organizations are family owned and controlled by family members, and human resource management activities tend to be viewed as just a company owner’s wish. But in recent years, labour-intensive and export-oriented industries have begun experiencing pressure from the EU and North American countries to maintain their labour-rights standards and to improve their factories’ working conditions (Bowen, 2014; ILO, 2013). This pressure from outside the country is compelling organizations to change their corporate culture and HRM practices. Researchers have indicated that improved working conditions and better wage rates could improve the productivity and the profitability of organizations in Bangladesh (Ahmed & Peerlings, 2009). Therefore, these organizations need to develop systematic and efficient HRM practices to be competitive globally and to cope with the changing needs of the economy. However, in a “family or crony-capitalism” situation, employers have yet to realize, or be convinced, that it would be in their best interest to adopt systematic and effective HRM practices. Empirical research on HRM in Bangladesh is still rare, and only a few studies have been published, usually on specific issues of HRM practices, in recognized and credible journals. Thus, the current study could pioneer an understanding of the past, present and future of HRM in Bangladesh, which would be immensely beneficial to students, researchers, academics, business executives and policymakers. In addition, this study should encourage first-generation Bangladesh entrepreneurs and corporate managers to develop systematic HRM practices and, thus, gain a competitive advantage from the country’s available human resources.
Methodology
The purpose of this article is to provide an overview of current status and future prospects of developing systematic and high-performing HRM practices in Bangladesh. Therefore, various secondary sources and materials were used to review the situations. The sources comprised of articles in academic journals, professional magazines and newspapers on HRM practices in Bangladesh. We also used documents published by national and international organizations to assess the current situation and future challenges with regard to HRM in Bangladesh. Lastly, we visited websites of public and private sector organizations to collect relevant information of HRM practices in Bangladesh.
Current HRM Practices: A Critical Assessment
Recruitment and Selection Practices in Public Sector Organizations
The Bangladesh Public Service Commission (PSC) conducts all recruitment and selection activities for public sector organizations on behalf of different government ministries, departments and divisions, as well as different individual enterprises (Karim, 2007). Civil service officials in Bangladesh are categorized horizontally into 29 cadres and vertically into six ranks in different ministries and departments (PSC Annual Report, 2013). The competitive examination conducted by the PSC is known as the Bangladesh Civil Service (BCS) examination and it assesses applicants’ knowledge on various compulsory and elective subjects, a psychological test and an interview. Then, the scores in each of these components are combined to indicate an applicant’s overall performance from different perspectives (PSC Annual Report PSC, 2013). The recruitment rules formulated by the Ministry of Establishment prescribe the method of recruitment, qualification of candidates, age limit, syllabi for examinations and other aspects of the selection process of BCS cadre officials.
However, civil service recruitments in Bangladesh have been characterized by irregularities, inconsistencies and political intervention. Furthermore, political leaders have tried to control bureaucrats by recruiting similar ideological applicants into the civil service (Bhuiyan, 2011; Ehsan, 2008; Karim, 2007; TIB, 2007). Now, the PSC has become an instrument of political patronage and is blamed for anomalies and unfairness in the civil service recruitment process. Civil service officers recruited in different years are labelled by some as “Political Cadres” because of the direct influence of political leaders in the recruitment process (Haque, 2011; TIB, 2007). In fact, the selection process in the civil service examination left considerable room for political leaders to influence recruitment, because these leaders selected members of the PSC based on the members’ ideological orientation. The formation of interview boards, appointment of psychologists, the subjective judgement of applicants’ suitability (either a pass or a fail) and the importance placed on oral interviews all provide opportunities to manipulate the selection process (Sarker, 2006; TIB, 2007).
The recruitment of non-managerial employees is usually within the jurisdiction of unit or plant managers. These managers, in consultation with the corporation or ministry-level personnel officers, determine the educational requirements, grading, pay structures and other aspects of jobs. Public sector organizations need to advertise regular or permanent jobs in the newspapers and maintain a formal selection procedure. However, in most cases, unsolicited employees are recruited on a part-time or job-sharing basis after recommendations from existing employees and other pressure groups, and are later absorbed into permanent posts or vacancies within the government guidelines (Jacobs, 2009). The selection procedure for non-managerial employees usually involves a written general knowledge test and an interview, which explores their basic ideas about the relevant job. However, whilst there are formal, specific policies guidelines in the government departmental recruitment and selection procedure, in practice, organizations recruit employees without necessarily having vacancies (TIB, 2007). In addition, when vacancies do exist, they are filled on ad hoc basis before being advertised externally. In reality, it is impossible to secure employment in public sector organizations without having contacts within the organizations or with influential people of the ruling government party (Haque, 2011; TIB, 2007).
Recruitment and Selection Practices in Private Sector Organizations
Private sector owners and managers consider the recruitment and selection of employees a personal matter and use informal recruitment channels. Private sector organizations are not bound by legal requirements to advertise jobs in the press or to maintain any formal recruitment and selection process (Absar, 2011; Mia & Hossain, 2014). They recruit as and when they feel it necessary, and appoint those whom they consider suitable after personal consideration. Friendship and kinship tend to take precedence over qualifications and skills as owners/managers fulfil their social obligations to support relatives and friends (Chowdhury & Mahmood, 2012). However, they do need to consider the requests of political leaders and other influential groups to run their business well. Failing to do so can make it difficult to obtain business loans, get necessary permissions from government offices, maintain the security of business sites and result in other unnecessary difficulties created purposely by the aggravated parties (Absar & Mahmood, 2010).
Most private sector organizations tend to recruit relatives to top positions. Thus, practices related to promotion, transfer, and benefits are manipulated according to social contacts and personal relationships. Sometimes, private sector organizations do advertise in newspapers, but only for jobs requiring higher-level technical competencies that cannot be found among friends and relatives. The influence of social contacts and personal relationships on recruitment is more open and socially acceptable in private sector organizations (Khan, 2013). These employers also tend to avoid a professional approach based on formal rules when recruiting because they perceive these rules as a threat to their power and ability to control the business. Occasionally, a private sector organization will place an advertisement ostensibly to recruit managerial employees. However, in reality, these advertisements are more company publicity than genuine recruitment initiatives.
The high unemployment rate and stiff competition for limited job opportunities also put pressure on top management to engage in nepotism by favouring friends and relatives in their recruitment and selection practices. The large labour market means there is a permanent supply of employees, and organizations seldom find it difficult to recruit or retain suitable employees. Occasionally, experienced employees may move elsewhere for better pay and other facilities. In the expanding economy, newcomers to an industry usually use head-hunters to recruit top-level managerial employees, and use informal channels to find suitable persons. The Bangladesh government has no regulations in place to control the recruitment and selection activities in the labour market.
Another important factor may be the characteristics of the production system in Bangladesh, as most businesses remain as small or medium enterprises and engage in labour-intensive activities. In this situation, employers can rely on unskilled employees and have few problems with word-of-mouth recruitment practices. Most private sector businesses are still owned and managed by family groups, and first-generation entrepreneurs dominate all business sectors. These entrepreneurs maintain social networks within family, clan, caste or ethnic groups and need to cater to requests from the state and its bureaucracy. This dependency between state and organizations has resulted in reciprocal relationships among the interest groups, and mutual “give and take” is institutionalized in every sphere of Bangladeshi society. The country’s financial system is still in its infancy, and private sector organizations depend completely on personal finance and bank loans from government-controlled financial institutions. Business owners need to convince politicians to sanction bank loans, and political leaders need financial sponsors to prevail within the electoral process. Thus, private sector organizations have to maintain good relations with government officials and political leaders for business reasons. In public sector organizations, the top management needs to maintain good relations with politicians in order to keep these important positions, and are obliged to obey the requests of those in government (Chowdhury & Mahmood, 2012).
Training and Development in Public Sector Organizations
For the public sector employees, the government, through the Ministry of Establishment, selects the trainees and determines training programmes unilaterally, without any consultation from the respective ministries (Mahmood & Akhter, 2011). The Ministry of Establishment determines the contents of the training courses and vests the responsibility in the Public Administration Training Centre (PATC), which imparts foundation training to all civil service cadre officers (Jacobs, 2009). In addition to the PATC, there are training institutes in Bangladesh that train civil service officers and other officials of the government’s autonomous organizations. Most such training institutes only engage in orientation training, or foundation training, for different categories of employees under the respective departments (Mahmood & Akhter, 2011).
In fact, the government allocates very little money to employee training and development programmes in the annual budget. However, it does occasionally initiate special training programmes for particular government officials with the bi-lateral agreement of donor countries or multi-lateral organizations. Whenever such opportunities arise, the top officials of the ministry or departmental heads unilaterally select the trainees, without conducting any training needs or job requirements analysis. In most cases, trainees are identified based on their personal relationship with the top officials or their links with the political leadership of the relevant ministry who ultimately decide on the senior officials. In government departments, employees obtain promotion solely based on seniority, irrespective of merit, performance or additional qualifications (Jacobs, 2009).
In public sector manufacturing organizations, employees have very few opportunities to undergo any training programmes, despite the fact that some organizations do have formal training departments. Most training is conducted on an informal and on-the-job basis, and only a few organizations have well-structured internal training programmes. A few public sector organizations (e.g., in the chemical and textile industries) organize training programmes for different levels of workers and supervisors through their own training centres. However, trainees are rarely selected using a training needs analysis or performance appraisal procedure. Managerial judgement on who receives training is subjective, being the prerogative of the chief executive of the organization, and as elsewhere, employees are chosen according to their personal relationship with top officials and their political affiliations. Furthermore, whenever any training opportunity arises, employees try to manipulate the selection process using the political leaders who hold the most power at the ministry level (Haque, 2011; Siddique, 2003). Similarly to the situation in government departments, training or further qualifications do not bring any benefit or career progression opportunity for the employees. Instead, promotion depends on the seniority determined by the entry-level selection tests, and on political links with higher-level positions. In most cases, employees see training as a reward from the higher management, which may result in extra money or a short break from routine work (Ehsan, 2008; Siddique, 2003).
The main limitation of government training programmes is that training or qualifications do not benefit employees, as these activities seem not to have any impact on their career path or promotion opportunities. In public sector organizations, promotion or career advancement is not linked with further skill development and qualification acquisition, but rather depends on seniority and interventions from canvassers and peers. Employees have no scope to avoid the entry-level seniority list to obtain promotions and career progression.
Training and Development in Private Sector Organizations
Training of human resources has yet to rise from its neglected position in private sector organizations in Bangladesh, which still do not perceive the need for training and development activities for both employees and managers (Absar, Arman & Nejati, 2014; Mia & Hossain, 2014). In an economy with a huge labour surplus, training initiatives are considered a cost rather than an investment for organizational development, and in private sector organizations, there are few systematic training practices for employee development. In general, training is considered the responsibility of employees, although some companies, most notably, pharmaceutical companies, are beginning to understand its importance.
The indifferent attitudes of both management and worker organizations in a labour surplus economy like that of Bangladesh, coupled with large-scale ignorance about the need for training programmes for workers hinder the initiation and implementation of training programmes. Industry and the educational institutes are not linked and, consequently, industry has no influence on the development of courses, curricula, or other instructional processes within the educational and training institutions (Mahmood & Akhter, 2011). Most trade unions are busy in bargaining and the settlement of industrial disputes, and have little or no time or energy to organize workers’ training programmes (Mahmood, 2008). As a result, the training programmes that do exist have not proved relevant or useful to industry. Another important issue is determining priorities in terms of skill development. This issue remains unresolved since policymakers and civil society representatives are divided on whether technical or general education should be emphasized (ILO, 2013).
Pay Structuring and Job Grading in Public Sector Organizations
The government created the National Pay Commission (NPC) to design the pay structure of public sector organizations and, in 1997, the NPC recommended a 20-grade pay structure for public sector employees, excluding workers in manufacturing organizations. Although the basis of this pay structure is not explicitly clear, the NPC adopted the historical categorization of employees used by the British government (Islington Commission, 1917, cited in Obaidullah, 1995). Accordingly, there are four broad categories of employees: Class I (officers/executives), Class II (junior officers), Class III (clerical/secretarial) and Class IV (custodial). In addition, there are four direct entry-level tiers, three promotion tiers, and two conversion tiers (Obaidullah, 1995).
For employees of public sector organizations, the government formed the National Pay Commission (NPC) and the National Wages and Productivity Commission (NWPC) to formulate two separate pay structures. The NPC recommends the pay structure, salary and benefits for employees in the non-manufacturing sectors, while the NWPC recommends the wage structure for those in the manufacturing sector. Both commissions consider four main parameters when recommending wage and salary structures and benefits: (a) the minimum wage should be adequate to provide for the basic needs of a worker’s family, comprising three adult consumption units; (b) industrial wages should be higher than agricultural or rural wages, and the wage of official employees; (c) wages should be linked to productivity; and (d) the ability of the enterprises to pay should be considered. The formation of a separate wage structure for manufacturing workers was justified on the grounds that manufacturing workers at the lower grades perform more demanding manual/physical work than do lower-grade non-manufacturing employees. In addition, manufacturing requires more grades to provide promotional opportunities to the workers because of their limited upward mobility to supervisor or managerial positions (Sarker, 2006).
In its formation of NPCs and NWPCs, the government usually selects representatives from different professional groups and employers’ associations unilaterally, but does not include worker or Class III/Class IV employee representatives in this decision-making body. Therefore, lower-level employees have always complained about its bias towards upper-level employees and have asked for a reduction in the pay differentials between the highest and lowest grades (PSC, 2013). However, the opinion of lower-level employees has counted very little, or even not at all, in subsequent Pay Commission recommendations.
The job grades in public sector organizations are based mainly on government-specified educational qualifications rather than on any job evaluation or job specifications designed by the respective departments (Chowdhury & Mahmood, 2012). The present job grading system is rooted in that of the British colonial administration, in which employees were not recruited to specific jobs, but instead were given ranks. Then, an employee’s pay was related directly to the job position/rank rather than to responsibilities or duties (Obaidullah, 1995). Job grades in different public sector organizations are developed in accordance with the hierarchical ladder specified in the National Pay Scales, and the pay for each grade is determined by “pay for rank” rather than “pay for person” or “pay for job”. Managerial employees’ job grades in public sector enterprises are categorized within the top10 grades of the national pay structure. Job grading in public sector manufacturing enterprises depends mainly on the perceived educational requirements of the job positions and relevant managerial experience of the upper-level jobs. In this context, jobs graded 1 to 9 are considered as Class I jobs, whereas jobs in grade 10 are considered Class II jobs, which mainly cover entry-level educational requirements and the quality of previous educational background (Obaiduallah, 1995).
Non-managerial employees’ pay grading also has its origins in the historical job classification introduced during the British period. Jobs in pay grades 11 to 16 are classified as Class III jobs, while those in 17 to 20 are Class IV jobs. Employees within pay grades 11 to 16 must have, as a minimum, the Higher Secondary Certificate (12 years full-time education) or equivalent educational qualifications. Employees within pay grades 17 to 20 do not need to have any recognized educational qualifications, other than some literacy or numerical ability. In fact, pay grading in public sector organizations is based on hierarchical ranking and is linked to perceived educational requirements for each rank or position. In Bangladeshi society, these classifications are so distinctive that employees in different categories use different transport, canteens and other civic facilities in the workplace. The centralized structure of pay bargaining in public sector organizations makes it difficult to link pay with performance, which in turn brings inefficiencies. As a result, organizations are losing competitiveness in the long run.
The latest pay commission, that is, the Eighth National Pay and Service Commission (NPSC) was formed in June 2014 and the commission has submitted its recommendations to the finance ministry in December 2014 (The Dhaka Tribune, 2014). This commission suggested pay raise up to 112.5 per cent for different categories of public sector employees, compared to 94 per cent of 2005 NSPC and 96 per cent of 2009 NSPC. The suggestions for comparatively higher salary increase aim to recruit better qualified talents into public services and to minimize the pay-gap between public and private sector employees. According to the proposal, the present 20 pay grades would be reduced to 16 grades. It is expected that the recommendations of Eighth NPSC, if implemented properly, will bring significant positive changes in the pay and performance of the employees of public sector.
Pay Structuring and Job Grading in Private Sector Organizations
Formal private sector pay structures follow two main procedures. Sectors in which collective bargaining is absent, owing to the non-existence of effective trade unions, use minimum wage provisions, while unionized organizations use collective bargaining arrangements at the enterprise level. Owing to the level of private sector development, most local private sector organizations have not yet developed any formal or institutionalized pay structure for their employees. Except for a few large organizations, employees’ pay or salary is determined in an arbitrary way (e.g., through personalized pay contracts), rather than any formal structure or grade (Chowdhury & Mahmood, 2012). The pay structure in large private sector organizations has some similarities with that in public sector organizations. Usually, there is one pay structure for managerial employees and another for non-managerial employees. In the absence of any legal obligations and state regulations, management unilaterally designs the pay structure for managerial employees. Almost no local private sector organizations follow any established pay structure for managerial employees. Usually the head of the organization decides the salary of the managerial employees after discussing the jobs with departmental heads. Non-managerial employees’ pay structure is determined through consultation and bargaining with Collective Bargaining Agents (CBA), and usually consists of 8 to12 pay scales/grades, depending on the organizational HR policy and CBA-management bargaining outcomes. Although blue-collar and white-collar employees’ pay grades are included in a unified pay structure, the differences in employee categories is explicit in the pay structure of different organizations (Mia & Hossain, 2014).
In the absence of any legal or recognized grading system for private sector organizations, management usually divide jobs into job clusters for grading purposes. Local private sector organizations place entry-level jobs in different departments within the same grade (comparable educational background and subsequent practical experience), as well as their corresponding pay scales, if they already have these (Absar & Mahmood, 2010; Khan, 2013). Otherwise, job grades in the private sector depend on individual employee competencies and bargaining with management, but there is no link to employee pay and fringe benefits. Sometimes, the identification of managerial or non-managerial posts depends on the opportunistic behaviour of the management. For example, a number of private sector banks and manufacturing organizations have categorized non-managerial jobs as managerial posts to avoid unionization and to control different terms and conditions (Khan, 2013).
Job grading of non-managerial employees depends on the individual organizations, where collective bargaining agents and management collectively determine the number of job grades and their corresponding pay scales. Traditionally, educational qualifications are honoured in the job grading process, and jobs with higher educational qualifications are placed in higher grades. Until 1992, the literacy rate in Bangladesh was about 26 per cent, and most workers in the traditional manufacturing sector were illiterate. Although, officially, unions and management are supposed to determine job grades jointly, in the absence of proper union bargaining capability, management unilaterally controls the process in most local private sector organizations.
Industrial Relations Scenarios in Public and Private Sector Organizations
In Bangladesh, the nature and role of trade unions vary from sector to sector, industry to industry and region to region (Gosh, Khabir & Islam, 2010; Mahmood, 2008). Collective bargaining on pay and allowances is prohibited in public sector organizations as the government determines uniform pay scales and allowances for all public sector organizations. Trade unions deal only with industrial conflicts and other issues, such as applying labour laws, improving working conditions, adopting welfare programmes for workers and the education and training of workers. This limited scope of collective bargaining forces trade unions to develop links with the influential actor (i.e., the government) to achieve their goals. As a result, industrial relations involve the interaction between political parties and trade unions rather than between enterprise management and worker representatives (Hossain, Sarker & Afroze, 2012; Mahmood, 2008).
In the private sector, collective bargaining negotiation takes place at the enterprise level between management and the union. If there is more than one union, then employer–employee negotiations take place between the management and the collective bargaining agent (CBA). The recognition of a workers’ organization for the purpose of collective bargaining depends on the individual employer and the strength of the workers organization. In the private sector, the industrial relations process is often disturbed by links between private and public sector unions, as well as the influence exerted by the latter on the former (Ahmed & Peerlings, 2009). Aggravated violence in the public sector often spills over to surrounding privately owned factories. Section 205 of the Bangladesh Labour Act 2006 provides guidelines for forming a “participation committee” in every organization employing 50 or more workers, with equal numbers of worker and employer representatives. However, in practice, few enterprises have introduced participation committees, and where they have, these mechanisms reportedly served a negligible role at the plant level. Most employers perceive such participation as an encroachment of their rights and prerogatives, and trade unions consider these committees a sort of parallel organization. This undermines committees’ effectiveness, imposing duties, obligations, and responsibilities on them without any corresponding benefits or choice in their management (Gosh et al., 2010; Mahmood, 2008). In recent years, the government has taken some initiatives to improve overall industrial relations situations by amending the national minimum wages on periodical basis for some thrust sectors, such as for garments and textile industries, and strengthened the Ministry of Labour and Manpower and its affiliated agencies to resolve labour disputes in a proactive manner (Absar, 2014).
Emerging Trends of HRM Practices in Bangladesh
Though HRM in Bangladesh still resembles traditional personnel management practices, in recent years, researchers have identified changes that indicate progress in terms of strategic HRM practices (Absar et al., 2014; Khan, 2013). First, the role and importance of HRM is increasing in organizations in Bangladesh. Many large organizations have already established separate HRM departments and hired professional HRM personnel with relevant education, knowledge and experience. A few organizations have even upgraded the status of HRM managers and incorporated the head of the HRM department on the corporate board. The development of professionalism and the establishment of professional associations and organizations may have prompted this elevation of HRM roles, because it has changed the attitude and perception of business communities towards the importance of HRM practices (Absar, 2014). The government, with help from the World Bank, established the Bangladesh Institute of Management, which offers specialized degrees and diplomas in HRM and related areas. Most public and private universities in Bangladesh now also offer Bachelor of Business Administration (BBA) and Master of Business Administration (MBA) degrees, with specialization in HRM. In addition to the educational institutions, two professional associations, namely, the Institute of Personnel Management (IPM) and the Bangladesh Society for Human Resource Management (BSHRM), have been formed by recognized HRM specialists to promote the HRM profession and development of HRM practices in Bangladesh. The BSHRM is organizing annual HR conferences on regular basis and working to develop professionalism among the HRM managers of the country (Absar, 2014). The contribution of BSHRM is widely recognized by the global HR community, and it has granted membership of Asia Pacific Federation of Human Resources Management (APFHRM) and the World Federation of People Management Association (WFPMA). Therefore, further developments in terms of HRM practices and recognition HRM professions are expected in near future.
Second, shifts in recruitment and selection practices are also visible in Bangladesh (Absar, 2011; Mia & Hossain, 2014). Private sector organizations are beginning to emphasize competency-based approaches in their recruitment and selection practices. Organizations are moving away from the traditional view of educational qualifications and experience to one focused more on individual achievements and work-related competencies. Employers are changing their focus from “what” to “how” to use qualifications and knowledge criteria. In the context of huge levels of unemployment, where sometimes more than 1000 applicants vie for a single position, educational achievement (i.e., grade point average) is still used to reduce the number of applications to a manageable figure. However, because competencies are assessed in a subjective manner, the manipulation of such criteria may still occur. As the HRM profession gains momentum and HRM managers become better equipped, the use of competency models appears to be more widespread. The dissemination of competency-based practices from multinational corporations (MNC) and international organizations is quite evident in different sectors (Absar, 2014; Chowdhury & Mahmood, 2012; Mahmood, 2014).
Globalization has changed the landscape of modern workplaces, and organizations are facing continuous automation and technological challenges in the changing nature of their business. These technological changes have placed increased pressure on organizations to update employees’ knowledge and skills in order to compete in the global arena. The pace of industrialization in Bangladesh also has intensified the competition for talented employees among organizations. To cope with the competition, organizations are now realizing the importance of investing in employee training and development activities, and are establishing separate human resource development (HRD) departments, including specialized professionals and experts. In some cases, the appointment of a Human Capital Manager or Talent Development Manager indicates the increased presence of HRD activities in Bangladesh (Absar et al., 2014). Attitudes towards employees are changing. Rather than considering employees as a cost or negligible resources, employers are realizing the potential value of highly skilled employees and are investing in employee training and development activities. Certainly, this shows a bright future for HRD.
The introduction of performance-related pay (PRP) is explicit in private sector organizations, mainly in multinationals and leading local organizations in Bangladesh (Absar, Nimalathasan & Mahmood, 2013). However, public sector organizations are still lagging behind in implementing such practices because of legal complexities. Most public sector organizations still consider seniority as the main criteria for pay and promotion. According to civil service employment regulations, entry-level seniority needs to be maintained throughout the service period. Employees who receive a minimum pass mark in the annual performance evaluation automatically qualify for a pre-specified annual salary increment, as determined in the National Pay Scale. However, there is no scope to reward any employee by more than this pre-specified increment, irrespective of their level of performance. In contrast, private sector organizations, concerned about productivity and growth, are gradually moving to PRP to improve productivity and employee motivation (Khan, 2013; Mia & Hossain, 2014). However, the operation of PRP and the selection of criteria to assess performance seem to be contentious issues. For example, the PRP system could have a negative effect on employees, who might not receive a pay raise because of apparent inefficiency or incompetence.
In recent years, private sector organizations have shifted their attitude towards workers and trade unions. In several instances, employers have taken the initiative to resolve industrial disputes, enabling unions and management to cooperate at the plant or sector level and avoid government intervention. Employers and employees both view this as a welcome step, because the earlier tripartite nature of the conflict resolution process seems to have been ineffective owing to government involvement and ulterior political motives. The bipartite dispute resolution mechanism in the garment and leather sector seems to be a good example of an effective industrial relations process in the Bangladeshi context. The Bangladesh Garments Manufacturers and Exporters Association (BGMEA) established a conciliation-cum-arbitration committee, consisting of a chief arbitrator and 18 members with equal representation from the BGMEA and the labour organizations in the sector. In the leather sector, the Bangladesh Finished Leather, Leather Goods and Footwear Exporters’ Association executive committees and trade unions meet every two years to discuss workers’ and employees’ grievances. Through mutual consultations and understanding, they have resolved many disputes, reflecting amity between workers and employees. Other sectors are also moving towards more congenial conflict resolution mechanisms, which is a positive sign for the future of industrial relations (Absar et al., 2013; Hossain et al., 2012).
As we mentioned earlier, lack of comprehensive studies on HRM practices in Bangladesh make it difficult to discern overall scenarios, and therefore, we collected information from many different sources. However, very recently (January 2014), as a rare initiative, the Ernest and Young LLP and the Bangladesh Society for Human Resource Management (BSHRM) jointly conducted a survey on HRM practices in Bangladesh with a sample of 1000 HRM managers from different sectors of the economy. The highlights of the survey are presented in the following (Box 1) which could help to illustrate a partial scenario of HRM in Bangladesh.
HRM in Bangladesh—A Few Highlights
About 33 per cent of organizations used internal referral and word of mouth in the employee recruitment process. Use of social media and mobile applications are very limited (i.e., less than 10 per cent) in the recruitment process.
Around 40 per cent of the organizations use formal background or reference check in the selection process.
About one-third of the organizations indicated outsourcing recruitment process sometimes in the past to recruitment managerial employees.
More than 25 per cent of the organizations do not conduct training need analysis and do not provide training to employees on regular basis.
Performance appraisals indicators include mostly functional achievements rather than behavioural aspects of the jobs. However, IT and telecommunications sectors are leading to introduce structured performance appraisal system and employee training need identification process.
More than 55 per cent of the organizations do not have any defined employee reward and recognition programme. However, 66 per cent organizations of first moving consumer goods, pharmaceuticals sectors and telecommunications sectors reported to have short-term incentive programmes.
About 95 per cent of the organizations do not provide long-term incentives to retain employees.
About 75 per cent of the organizations have structured mechanisms to deal with employee grievances.
About 30 per cent of the organizations reported to have preventive mechanisms to avoid employee conflicts.
Future Challenges of HRM Practices in Bangladesh
In Bangladesh, women’s participation in the formal labour market used to be non-existent. However, this scenario is changing fast with the rapid industrialization of the garment, electronics and other labour-intensive industries. Bangladesh is now considered a supplier of products to MNCs in the garment, electronics, pharmaceutical and other labour-intensive industries, and employers are blamed for labour exploitation and unethical HRM practices. Bangladesh is far behind in terms of implementing equal employment opportunities and inclusive employment practices (ILO, 2013). People with disabilities, women and minority groups are still deprived of employment opportunities. HR managers are facing a big challenge in adjusting to diversity management and inclusion issues, as these require changes in employment policies, such as those dealing with working hours, health and safety measures, statutory maternity leave, a work–life balance, childcare facilities and so on (Bowden, 2014). While as a signatory of ILO conventions, there may be laws and regulations to deal with these emerging issues, implementing these laws is a daunting task in a traditionally conservative male-dominated and hierarchical society.
Though Bangladesh is a country with abundant labour, employers still complain about a shortage of highly skilled employees in many professions, as well as a lack of competent senior level employees. In the absence of an integrated national education and HRD policy, educational institutes are producing thousands of non-technical and non-vocational graduates every year. This creates a huge imbalance in the labour market. Many highly educated graduates remain unemployed, on the one hand, while knowledge-intensive industries face skill shortages on the other. In addition, in recent years, the free-market economy has intensified competition in different industries, and companies now face stiff competition in acquiring and retaining talented employees. Previously, with limited options in terms of employment opportunities, job security and seniority-based pay and promotion were used to motivate employees. However, the expectations of the new generation are quite different to those of earlier generations, and traditional methods of motivating employees are no longer effective in the new labour market. As a result, HR managers are struggling to attract and retain the talent required by organizations.
The legal context of Bangladesh is viewed by some as a barrier to introducing the latest HRM practices. For example, organizations cannot initiate any restructuring or retrenchment without the approval of trade unions. Most public sector organizations are overstaffed and incurring huge operating losses every year. However, trade union leaders seldom support any kind of restructuring, as this could lead to job losses for the union members. Similarly, organizations need to use flexible employment practices to adjust to seasonal labour force requirements. However, labour laws in Bangladesh turn it very complicated for the organizations to hire part-time employees or to change employment contracts from a full-time permanent position to a temporary or adjunct position. Such a rigid regulatory environment handicaps HRM managers who need to implement appropriate and effective HRM practices in their organizations (Mahmood, 2008; Sarker, 2006).
As Bangladesh is moving from being a developing economy to an emerging economy, people’s expectations and values are also changing. In the last 20 years, because of globalization and the IT revolution, people are better informed about the world, work and civic facilities of modern life. While previous generations worried about savings and job security, the new generation of employees are more concerned about relationships, a work–life balance and meaning in their work. Women are joining the labour market in increasing numbers, and the number of working couples is increasing too. While women professionals are moving towards higher-level employment positions, they face a daunting challenge to maintain a work–life balance and career development in the traditional Bangladesh society (ILO, 2013).
In Bangladesh, politics determines or influences most business decisions. It is difficult to differentiate between a businessperson and a politician. Businesspeople need to maintain contact with political leaders to obtain loans from banks or to get necessary support from the government or supporting agencies. As mentioned earlier, recruitment, promotion, trainee selection, salary adjustment, management–union relationships and so on, are all influenced by politics and politicians. Political ideology became prominent in employee recruitment and selection, training and promotion activities in public sector organizations. Private sector business owners also consider political links or the background of employees to achieve their long-cherished political motives (Chowdhury & Mahmood, 2012). However, for long-term industrial development, businesses need to separate themselves from national politics. In addition, national policies need to remain constant across changes in the government, and businesspeople should not be harassed for their political beliefs. For HRM managers, moving beyond this tradition of political links, without the consent of owners, could be a big challenge when implementing the latest HRM practices (Hossain et al., 2012).
The HRM managers in multinational corporations also face a dilemma in maintaining the balance between global HRM prescriptions and the requirements of local subsidiaries in Bangladesh. As globalization bring the world closer, HRM practices in Bangladesh are also influenced by multinationals and other dominant ideologies. Many multinationals have been operating in Bangladesh for a long time, and their financial performance is better than that of the local competitors. MNCs are role models in developing systematic HRM practices and leading local companies are trying to imitate their practices (Chowdhury & Mahmood, 2012; Mahmood, 2014). However, owing to cultural and institutional differences, the efficacy of these practices for local companies remains in doubt.
Conclusions
HRM practices in Bangladesh used to resemble those of personnel management practices in which the role of HRM managers was confined to administrative and legal issues, as happened in many other developing and emerging economies (Budhwar & Debrah, 2001; Mahmood & Baimukhamedova, 2013). In public sector organizations, HRM practices are still highly centralized and all practices respond to government directives. Private sector organizations are moving towards more strategic HRM practices, which is a positive sign for the future economic development of the country. However, Bangladesh, as a developing country, is still trying different development policy regimes, and lags behind in terms of developing specific institutional arrangements for a distinctive national HRM model (Chowdhury & Mahmood, 2012; Khan, 2013).
The findings of the study could have some implications for managers and policymakers in Bangladesh and other developing countries. First, it revealed some changes or evolution of new HRM practices in both private and public sector organizations in Bangladesh. Managers need to be aware of such developments and should reform their HRM department. Otherwise they will suffer competitive disadvantage due to old-fashioned HRM practices in the long term. Second, use of psychological tests and multiple selection tests appeared to be effective to find right types of employees. This could be a wakeup call for public sector managers to change their traditional selection procedure focused to educational qualifications and previous experience. Third, employee training and development practices are still seems to be overlooked by the top management, although some organizations already established separate HRD departments. But, with increased openness of the global economy and transnational labour movement, business organizations in Bangladesh soon will face acute shortage of high skilled talents for different professions. Managers need to be proactive to combat this anticipated problem as the study indicated. Fourth, though organizations are introducing formal performance appraisal systems, their links with employees pay and promotions are not yet widely visible. Managers need to implement such practices for promoting competitiveness among the employees. Finally, as most of the export oriented industries are working as up-stream suppliers of leading global multinationals and those global companies are becoming conscious about poor records of labour rights and universal labour compliance issues. Therefore, mangers should initiate alternatives employee representations mechanisms and diversity promoting activities to meet the demands of their global suppliers and customers.
As a review paper, this study tried to assess current scenarios and future prospects of HRM practices in Bangladesh. Based on the findings of the study, future researchers could explore the following issues for further development of HRM research in Bangladesh. First, while developments in HRM are obvious, but developments in different functional areas of HRM are not even. For example, adoption of multiple selection tests and performance appraisal systems appeared to be more widespread then employee development and empowerment practices. HRM researchers advocated adoption of bundle of HRM practices rather than promoting isolated practices. Future research could explore effectiveness of such selective HRM practices in Bangladeshi contexts. Second, both high commitment HRM practices (development-oriented) and high performance HRM practices (cost-focused) are now emerging to some extent in private sector organizations. Effectiveness of those practices usually varies based on industry, sector, markets and competitiveness of the economy. Future research could find effectiveness of those combinations of HRM practices in different sectors or industries in the economy as well as for different levels of employees, and prescribe more specific HRM practices for specific industries and sectors of the country. Also, the socio-cultural differences in Bangladesh may require careful adoption of universal best HRM practices. Future researchers could examine the effectiveness of so-called best practices and find different set of modified HRM practices effective in the socio-cultural context of Bangladesh.