HRM Practices Banking Sector of BangladeshFast global and technological developments have made today’s business environment highly uncertain and even chaotic. Organizations are seeking newer ways to promote their adaptability to the complexities of the changed scenario so as to survive and prosper. Globally, organizations are striving to realize competitive success through strategic management of human resources. Thus, people management has never been more important than it is today. Therefore new themes have emerged in the process, replacing some of the old ones. The new thinking in this regard is referred to as Human Resource Management (HRM), which carries a more proactive and strategic connotation. HRM is intimately intertwined with business strategy. In many situations, it even critically influences business strategy.
The development of employee commitment through employee involvement and empowerment is one of the key objectives of any HRM discourse. The complex business objectives in today’s business environment are difficult to realize without developing highly committed and motivated employees who would strive to contribute to organizational goals. That is why, human resource issues are no more the exclusive preserve of personnel specialists; rather line and general managers are being increasingly involved in handling key HR issues and in evolving, shaping and managing human resource strategies and policies. These developments have given a far greater recognition to the HR function in organizational decision-making processes.
Objectives of Study:
Every task has a particular aim. A study without objective cannot reach its destination. The main objectives of this study are to find out the overall HRM process of various banks of Bangladesh. The objectives of the study conducted in the banks are mentioned as under:
To know overall HRM process of the bank
To acquire practical knowledge on HRM practice
To know the functions of various departments of HRM
To learns about bank’s employment planning
To be familiar with the recruitment and selection process
To learn about the employee benefits
Making a precise picture of the present situation of employment procedure in Bangladesh.
Scope of the study:
“HRM practice in the banks of Bangladesh”
First of all it will help the researcher to get a clear idea of the HR department and its working procedures as well as its key roles in a company.
Secondly, Human Resource is an emerging concept in Bangladesh and organizations such as a Bank put much more emphasis on this department so this study will help the organization as well. In this regard, this research will help to increase organization’s performance in a way the employee of the organization will think.
Last of all, it will encourage further study in this area and will provide useful guidelines for this type of research.
Limitation of the study:
The main limitation of the study is lack of information provided by the organization. National Bank Limited was very cooperative with us in making this assignment but due to its company rule and insecurity in the market caused this obstacle that we could not overcome. Other limitations of this study are:
Less analytical power, Non-cooperative behaviors of some officials of the bank,
There were a few questions which were tactfully avoided or not exactly answered by the respondents,
Large scale research was not possible due to constraints and restrictions posed by the organization
Research design:
Research design is a vital part of the research. There are different types of data collection methods. Among them this research is conducted on the basis of both survey and secondary data analysis. To collect all the primary data survey method has been used. To collect the secondary data secondary data analysis method has been used. In survey method, all Primary Data was the Qualitative Data and was collected by asking questions through interview and formal and informal discussion. No questionnaire was used for this purpose.
Data collection:
Two types of data were collected, both primary and secondary.
1. Primary data collection:
All the required primary data were collected through direct interview and also through informal discussion. Primary data are collected through: Open ended and close ended questions Conducting interview of the staffs of the branch
2. Secondary data collection:
Secondary data are collected from, Annual report Company’s previous
report Company’s other published information
Data analysis:
There is no certain analyzing tool to analyze the data of a descriptive
research. This study is mainly explaining the HR activities in banks.
Industry Overview of the study
Banking industry in Bangladesh:
The Banking Industry in Bangladesh is one characterized by strict regulations and monitoring from the central governing body, the Bangladesh Bank. The chief concern is that currently there are far too many banks for the market to sustain. As a result, the market will only accommodate only those banks that can transpire as the most competitive and profitable ones in the future. Currently, the major financial institutions under the banking system include:
1. Bangladesh Bank
2. Commercial Banks
3. Islamic Banks
4. Leasing Companies
5. Finance Companies
Of these, there are four nationalized commercial banks (NCB), 5 specialized banks, 11 foreign banks, 26 domestic private banks and 4 Islamic Banks currently operating in Bangladesh.For analyzing the human resource management process we have chosen 3 banks which are-
1) Bangladesh bank – the central bank of Bangladesh
2) Commercial bank of Ceylon – foreign commercial bank
3) National bank ltd – private commercial bank
Human Resource Management:
Human resource is a term used to describe the individuals who comprise the workforce of an organization, although it is also applied in labor economics to, for example, business sectors or even whole nations. Human resources is also the name of the function within an organization charged with the overall responsibility for implementing strategies and policies relating to the management of individuals (i.e. the human resources). This function title is often abbreviated to the initials ‘HR’.
Human resources purpose and role:
In simple terms, an organization’s human resource management strategy should maximize return on investment in the organization’s
human capital and minimize financial risk. Human Resources seeks to achieve this by aligning the supply of skilled and qualified individuals and the capabilities of the current workforce, with the organization’s ongoing and future business plans and requirements to maximize return on investment and secure future survival and success. In ensuring such objectives are achieved, the human resource function purpose in this context is to implement the organization’s human resource requirements effectively but also pragmatically, taking account of legal, ethical and as far as is practical in a manner that retains the support and respect of the workforce.
Key functions:
Human Resources may set strategies and develop policies, standards, systems, and processes that implement these strategies in a whole range of areas. The following are typical of a wide range of organizations:
Recruitment, selection, and on boarding (researching)
Organizational design and development
Business transformation and change management
Performance, conduct and behavior management
Industrial and employee relations
Human resources (workforce) analysis and workforce personnel data management
Compensation, rewards, and benefits management
8. Training and development (learning management)
9. Implementation of such policies, processes or standards may be directly managed by the HR function itself, or the function may indirectly
10. Supervise the implementation of such activities by managers, other business functions or via third-party external partner organizations.
Compensation Management:
Compensation Management is an integral part of the management of he organization. Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. It may achieve several purposes assisting in recruitment, job performance, and job satisfaction. It is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees. It is a tool used by management for a variety of purposes to further the existence and growth of the company. It may be attuned according to economic scenario, the business needs, goals, and available resources. Compensation Management contributes to the overall success of the organization in several ways. To be effective, the managers must appreciate the value of competitive pay, their human resources, and have an investment view of payroll costs. We want to maintain pay levels that attract and retain quality employees while recognizing the need to manage payroll costs.
The increasing competitiveness of the labour market and turnover of employees had resulted in nightmare in compensation planning. Apart from this, the growing demands of the employees and competitive salaries offered by multinational companies had almost resulted in a compensation war in certain industries. Therefore, the human resources managers and tax experts have to evolve proper compensation planning for High end and qualified employees. The components of compensation have to be devised in such a way that, it focuses on the growing demands of employees while retaining the competitiveness and profitability of the company.
Compensation management, also known as wage and salary administration, remuneration management, or reward management, is concerned with designing and implementing total compensation package. The traditional concept of wage and salary administration emphasised on only determination of wage and salary structures in organisational settings. Pay is a difficult topic of conversation in most organizations. In fact, the topic is altogether taboo in many workplaces. It simply isn’t discussed unless absolutely necessary. And, when it is necessary, such as when a pay raise (or lack of one) must be explained to an employee, many managers find themselves at a loss for words. As the dreaded date of such a discussion approaches, managers may begin checking their sick time banks to see if they can disappear for a day or two.
While it may be a touchy subject, pay is a critical factor in the work lives of employees. Jobs are accepted or rejected based in part on starting salary and the opportunity for future increases in pay. Employees compare their pay to that of others in the same line of work. They constantly compare their pay level to their level of contribution, trying to determine whether the ratio of give and receive is a fair one. While it may not be a frequent topic of open discussion, employees think about pay often.
Components of compensation:
Basic wages/Salaries:-
These refer to the cash component of the wage structure based on which other elements of compensation may be structured. It is normally a fixed amount which is subject to changes based on annual increments or subject to periodical pay hikes. Wages represent hourly rates of pay, and salary refers to the monthly rate of pay, irrespective of the number of hours put in by the employee. Wages and salaries are subject to the annual increments. They differ from employee to employee, and depend upon the nature of job, seniority, and merit.
Dearness allowance:-
The payment of dearness allowance facilitates employees and workers to face the price increase or inflation of prices of goods and services consumed by him. The onslaught of price increase has a major bearing on the living conditions of the labour. The increasing prices reduce the compensation to nothing and the money’s worth is coming down based on the level of inflation. The payment of dearness allowance, which may be a fixed percentage on the basic wage, enables the employees to face the increasing prices.
Incentives:-
Incentives are paid in addition to wages and salaries and are also called ‘payments by results’. Incentives depend upon productivity, sales, profit, or cost reduction efforts. There are: {a) Individual incentive schemes, and (b) Group incentive programmes. Individual incentives are applicable to specific employee performance. Where a given task demands group efforts for completion, incentives are paid
to the group as a whole. The amount is later divided among group members on an equitable basis.
Bonus:-
The bonus can be paid in different ways. It can be fixed percentage on the basic wage paid annually or in proportion to the profitability. The Government also prescribes a minimum statutory bonus for all employees and workers. There is also a bonus plan which compensates the Managers and employees based on the sales revenue or Profit margin achieved. Bonus plans can also be based on piece wages but depends upon the productivity of labour.
Non-monetary benefits:-
These benefits give psychological satisfaction to employees even when financial benefit is not available. Such benefits are: (a) Recognition of merit through certificate, etc. (b) Offering challenging job responsibilities, (c) Promoting growth prospects, (d) Comfortable working conditions, <e) Competent supervision, and (f) Job sharing and flexi-time.
Commissions:-
Commission to Managers and employees may be based on the sales revenue or profits of the company. It is always a fixed percentage on the target achieved. For taxation purposes, commission is again a taxable component of compensation. The payment of commission as a component of commission is practised heavily on target based sales. Depending upon the targets achieved, companies may pay a commission on a monthly or periodical basis.
Mixed plans:-
Companies may also pay employees and others a combination of pay as well as commissions. This plan is called combination or mixed plan. Apart from the salaries paid, the employees may be eligible for a fixed percentage of commission upon achievement of fixed target of sales or profits or Performance objectives. Nowadays, most of the corporate sector is following this practice. This is also termed as variable component of compensation.
Piece rate wages:-
Piece rate wages are prevalent in the manufacturing wages. The laborers are paid wages for each of the Quantity produced by them. The gross earnings of the labour would be equivalent to number of goods produced by them. Piece rate wages improves productivity and is an absolute measurement of productivity to wage structure. The fairness of compensation is totally based on the productivity and not by other qualitative factors.
Fringe benefits:-
Fringe benefits may be defined as wide range of benefits and services that employees receive as an integral part of their total compensation package. They are based on critical job factors and performance. Fringe benefits constitute indirect compensation as they are usually extended as a condition of employment and not directly related to performance of concerned employee. Fringe benefits are supplements to regular wages received by the workers at a cost of employers. They include benefits such as paid vacation, pension, health and insurance plans, etc. Such benefits are computable in terms of money and the amount of benefit is generally not predetermined. The purpose of fringe benefits is to retain efficient and capable people in the organisation over a long period. They foster loyalty and acts as a security base for the employees.
Profit Sharing: –
Profit-sharing is regarded as a steppingstone to industrial democracy. Profit-sharing is an agreement by which employees receive a share, fixed in advance of the profits. Profit-sharing usually involves the determination of an organisation’s profit at the end of the fiscal year and the distribution of a percentage of the profits to the workers qualified to share in the earnings. The percentage to be shared by the workers is often predetermined at the beginning of the work period and IS often communicated to the workers so that they have some knowledge of their potential gains. To enable the workers to participate in profit-sharing, they are required to work for certain number of years and develop some seniority. The theory behind profit-sharing is that management feds its workers will fiilfill their responsibilities more diligently if they realise that their efforts may result in higher profits, which will be returned to the workers through profit-sharing.
Approaches of compensation management
There are 3P approach of developing a compensation policy centered on the fundamentals of paying for Position, Person and Performance. Drawing from external market information and internal policies, this program helps establish guidelines for an equitable grading structure, determine capability requirements and creation of short and long-term incentive plans. The 3P approach to compensation management supports a company’s strategy, mission and objectives. It is highly proactive and fully integrated into a company’s management practices and business strategy. The 3P system ensures that human resources management plays a central role in management decision making and the achievement of business goals.
1 . Paying for position
2. Paying for person
3. Paying for performance
Because it is so important to employees, the issue of pay deserves to be dearly addressed. In spite of their hesitanee, managers are capable of dealing with this sometimes difficult issue in a professional and effective manner. By keeping the following basic points about pay in mind, they can address virtually any pay-related topic with their employees in a professional and productive manner.
Specificity is Key
Pay is a topic with many different shades and a variety of implications. Whenever approaching the subject, it is important to work out the details beforehand so that specifics can be clearly communicated. For the manager, this means that the increase amount is nailed down before discussing a promotion with an employee. No chance of misunderstanding or false expectations can be permitted. Far too often, managers are apt to discuss generalities. “It will mean a good increase.” What exactly does that mean in terms of the employee’s monthly budget? If care is not taken here, good news can become the source of conflict and resentment.
Source:
http://www.assignmentpoint.com/business/human-resource-management/hrm-practices-banking-sector-of-bangladesh.html
