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Human Resource Management Practices in


Bangladesh: Current Scenario and Future
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Article

Human Resource South Asian Journal of Human


Resources Management
Management Practices 2(2) 171–188
2015 SAGE Publications India
in Bangladesh: Current Private Limited
SAGE Publications
Scenario and Future sagepub.in/home.nav
DOI: 110.1177/2322093715599481
Challenges http://hrm.sagepub.com

Monowar Mahmood1
Mir Mohammed Nurul Absar2

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 devel-
opments 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 devel-
oping countries and, we hope, will encourage future research.

Keywords
HRM practices, developing country, Bangladesh

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,

1
Bang College of Business, KIMEP University, Almaty, Kazakhstan.
2
School of Business, Chittagong Independent University, Chittagong, Bangladesh.

Corresponding author:
Monowar Mahmood, Bang College of Business, KIMEP University, Almaty, 050010, Kazakhstan.
E-mail: monowar@kimep.kz

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172 South Asian Journal of Human Resources Management 2(2)

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 organiza-
tions in Bangladesh (Ahmed & Peerlings, 2009). Therefore, these organizations
need to develop systematic and efficient HRM practices to be competitive glob-
ally 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 prac-
tices. 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 under-
standing 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

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Mahmood and Absar 173

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, qualifi-
cation 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 appli-
cants 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 adver-
tise 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

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174 South Asian Journal of Human Resources Management 2(2)

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 neces-
sarily 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 recruit-
ment 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 opportuni-
ties 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, expe-
rienced employees may move elsewhere for better pay and other facilities. In the

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Mahmood and Absar 175

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 govern-
ment (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 unilater-
ally, 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

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176 South Asian Journal of Human Resources Management 2(2)

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 oppor-
tunities to undergo any training programmes, despite the fact that some organiza-
tions 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 proce-
dure. 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 organiza-
tions, promotion or career advancement is not linked with further skill develop-
ment 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 respon-
sibility 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

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Mahmood and Absar 177

about the need for training programmes for workers hinder the initiation and imple-
mentation 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 insti-
tutions (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 manu-
facturing 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 recom-
mends the pay structure, salary and benefits for employees in the non-manufac-
turing 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 agricul-
tural 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 repre-
sentatives from different professional groups and employers’ associations unilat-
erally, but does not include worker or Class III/Class IV employee representatives
in this decision-making body. Therefore, lower-level employees have always

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178 South Asian Journal of Human Resources Management 2(2)

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 speci-
fications 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 posi-
tion/rank rather than to responsibilities or duties (Obaidullah, 1995). Job grades in
different public sector organizations are developed in accordance with the hierar-
chical 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 require-
ments 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 hierar-
chical 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 compet-
itiveness 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

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Mahmood and Absar 179

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 organ-
izations. 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 organi-
zations, where collective bargaining agents and management collectively determine
the number of job grades and their corresponding pay scales. Traditionally,

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180 South Asian Journal of Human Resources Management 2(2)

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 tradi-
tional 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 representa-
tives (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 manage-
ment 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

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Mahmood and Absar 181

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 corpo-
rate board. The development of professionalism and the establishment of profes-
sional 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 profes-
sions 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 prac-
tices. 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 posi-
tion, 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

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182 South Asian Journal of Human Resources Management 2(2)

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 organiza-
tions 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 regula-
tions, entry-level seniority needs to be maintained throughout the service period.
Employees who receive a minimum pass mark in the annual performance evalua-
tion 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 mech-
anism in the garment and leather sector seems to be a good example of an effective

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Mahmood and Absar 183

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.

BOX 1 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.
Source: Daily Star, 2 February 2014.

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184 South Asian Journal of Human Resources Management 2(2)

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, pharma-
ceutical 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 employ-
ment 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 expec-
tations 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 restruc-
turing 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).

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Mahmood and Absar 185

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, manage-
ment–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 tradi-
tion 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

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186 South Asian Journal of Human Resources Management 2(2)

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 policy-
makers in Bangladesh and other developing countries. First, it revealed some
changes or evolution of new HRM practices in both private and public sector organ-
izations in Bangladesh. Managers need to be aware of such developments and
should reform their HRM department. Otherwise they will suffer competitive disad-
vantage 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 profes-
sions. 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 repre-
sentations 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 pros-
pects 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

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Mahmood and Absar 187

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.

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