Human Resource Management Practices of Public Banks in Bangladesh

Abstract
HRM has been much talked about and written about in recent years. Human resource department is an essential part of Banks in Bangladesh. An organization is valueless without its manpower/human resource. Human resource is, the most powerful element/key of an organization. Purpose:This paper sets out to explore the Human Resouces Management pracites in Public banks in Bangladesh, specially in Sonali Bank Limited. It briefly discusses the literature aboutall the activities that come under the banner of HRM in Sonali Bank Limited. Finding: This Paper discuss about current and previous all kind of Human Resource activities of Sonali Bank Limited and other public banks in Bangladesh. By focusing on the HR activities this paper describes the real phenomena and functions of HRM practices of public sectors in Bangladesh and found that their recruitment and motivation strategies need to be redesigned. Originality/Value: This report is based on both primary and secondary data. Initially, the work is started with data those were available at Companys Annual Report and companys news letter. Moreover, it becomes helpful to gather some more information from the website of the company. Information regarding HRM practices are collected from interviewing with the HR Manager, AGM, senior officers. Research Limitation: This report focuses on Human Resource Management Practices of public banks in Bangladesh, lack of knowledge and experience, lack of communication, due to shortage of time information was not collected in details from the personnel of Public Banks. Keywords: Human resource, Sonali bank, public sectors.

Page 1

Human Resource Management Practices of Public Banks in Bangladesh

Introduction
The effective performance of an organization depends not only on the available technical resources, but also on the quality and competence of its employees as required by the organization from time to time. The difference in the level of performance of two organizations depends on utilization value of employees. Moreover, the efficiency of production process and various areas of management depend to a greater extent on the level of quality employee retention and development. The term human resources refer to the knowledge, skills, creative abilities, talents, aptitude, values and beliefs of an organizations work force. The more important aspects of human resources are aptitude, values, attitudes and beliefs. But only a few companies in Bangladesh have started putting Human Resources Management systems in place that support this philosophy. Employee satisfaction is a prerequisite for staff retention. Organizations with higher staff retention rates are naturally better at retaining knowledge, which can lead to better performance and profit for the business. Improved employee satisfaction reduces the cost of staff turnover, builds brand loyalty with staff and positions the company as an employer of choice that attracts talented people to the organization. It is very important for management to have knowledge about the ways the employees are motivated. Sometimes it may be by monetary incentives or by internal factors like recognition and challenge at work. Human resources constitute the most important component of modern organizations. The accomplishment of organizational missions and objectives depends, to a large extent, on having right persons in right positions as well as the commitment and contributions of those involved. In the age of knowledge economy, human resource is considered as the most important resource of the organizations and it became decisive for success of any organization (Moyeen & Huq 2001; Schuler 1990; Werther & Davis 1996). Human resource management (HRM) refers to the
Page 2

Human Resource Management Practices of Public Banks in Bangladesh

policies and practices including human resource planning, job analysis, recruitment, selection, orientation, compensation, performance appraisal, training and development, and labor relations (Dessler 2007). The purpose of human resource management is to improve the productive contributions of employees and provide competitive advantage to the organizations (Werther & Davis 1996). It is well recognized that an organization enriched with committed, motivated, talented, and competent human resource can achieve any kind of challenging goals. Success of managers in the new century would absolutely depend upon their capabilities in managing human resources (Budhwar & Debrah 2001). There are about fifty local banks in Bangladesh totally. Most of these banks are private commercial banks and specialized banks except for four nationalized commercial banks. The banking sector alone accounts for a substantial share of assets of the financial system. The efficiency of national investment depends on the complementary roles of both the private and public sectors and this financial sector requires a highly skilled manpower and quality information to undertake this vast range of tasks. For banks in Bangladesh to survive in a very competitive environment, they need to design effective human resource (HR) practices that encourage the high performance of employees. It seems that there is a gap in the empirical knowledge available about the effects of HRM practices on turnover of employees in the organizational context particularly employee turnover in banks in Bangladeshi context from the perspective of managers. This study finds out which variables causing employee turnover and how they impact employee intention to leave. In addition to this, the study also focuses on various HR practices in the banking industry. Human resources constitute the most important component of modern organizations. The accomplishment of organizational missions

Page 3

Human Resource Management Practices of Public Banks in Bangladesh

andobjectives depends, to a large extent, on having right persons in right positions as well as the commitment and contributions of those involved. Human resource management practices can contribute to superior productivity directly by finding better and more efficient ways to achieve objectives and indirectly by improving the quality of work life for employees (Werther & Davis 1996). Effective HRM practices can achieve high productivity and corporate financial performance, low scrap rate, and low

employee turnover (Arthur 1994; Huselid 1995). Proper human resource management practices such as incentive pay, teams, flexible job assignments, employment security, and training can improve productivity enormously (Ichniowski, Shaw & Prennushi 1997; Katou & Budhwar 2007).

HRM practices in Bangladesh

Human Resource must be sufficient to ensure the healthy operation of the organization, whether it is a business firm, a government agency, a professional football team or a University. Toward this objective of continuing healthy operations, the organization requires human resource planning. Human resource planning is one of the most important elements in a successful HRM program. Specifically, human resource planning is the process, by which an organization ensures that it has the right number and kinds of people, at the right places, at the right time, capable of effectively and completing those tasks that will help the organization achieve its overall objectives. Human resource planning then translates the organization's objectives and plans into the number of workers needed to meet those objectives. Without clear cut planning, estimation of an organization human resource need is reduced to mere guesswork. Human Resources department is an indispensable part of an organization to achieve its objectives. To improve the HRD, it takes proper planning and managing that is human resource
Page 4

Human Resource Management Practices of Public Banks in Bangladesh

management to be followed. HRM means concern with the people dimension in management. Since every organization is made up of people, acquiring their services developing their skills, motivating them to high levels of performance and ensuring that they continue to maintain their commitment to the organization are essential to achieving organizational objectives. In the past, HR role was concentrated to hiring firing and letter issuance-dispatchingfiling stage. Now it has started to perform more than that. Such as Employee motivation, Employee development, Employee retention, facilitating organizational development initiatives etc. and thus contributes to the achievement of organizational goals. These value added job has just begun in BD. For a good tomorrow, this is the starting point. Bangladesh is a developing country with significant socioeconomic development opportunities. To maximize the outcome from those opportunities, business organizations need to attract, retain and manage their human resources effectively by managing their expectations effectively. Studying HRM practices in Bangladesh and how cultural and contextual issues affect them can benefit Public Companies in different ways. HRM practices have been researched in Bangladesh from different perspectives. A researcher explored HRM practices of 24 small enterprises operating in Dhaka. He identified that in case of recruitment, personal contact was the primary means (58%) followed by advertisement in newspaper (21%), walk-in (13%), and company notice board (8%). All the enterprises, except one, used work sample test and interview for the selection of employees. On-the-job training was observed to be the most widely used one. Most of the enterprises (87.5%) paid one or more types of allowances in addition to salary. (Rab) Another research examined the roles of human resources, and infrastructure in the industrialization process of Bangladesh. The observation was that ineffective human resource

Page 5

Human Resource Management Practices of Public Banks in Bangladesh

management was one of the major problems faced by industrial sector of Bangladesh. Most of the HRM practices such as HR planning, recruitment, selection, promotion, performance appraisal, compensation, incentives, and industrial relations were not performed properly in industries (Shelly, 1994). Another study showed that the transformation of personnel management into human resource management. Based on different empirical and theoretical studies conducted in the western world, the authors distinguished between personnel and human resource management. Another researcher (Ahmed, 2001) discussed about the linkage between human resource management and corporate strategy. He also revealed that corporate strategies developed by Michel Porter such as cost leadership, differentiation, and focus strategies had significant impact on HR strategies and practices. A study of HRM practices on 92 medium and large business enterprises (public and private sector) located in Dhaka, Bangladesh. They found that only 62% of surveyed organizations had an HR/IR department. About 96% organizations had training programs. 91% of organizations had performance appraisal system and similar percent of organizations had a system of rewarding the good employees. The least prevalent practice among the surveyed organizations was employee pension plan. The researchers inferred that union status (presence of unions) was associated with some HRM practices and firms size was found as an important predictor of some of the HRM practices. (Moyeen, 2001). In Bangladesh HR planning generally prescribes HR strategies which define what an organisation wants to do in the longer term to address critical HR issues and to develop and implement policies, practices and processes that will further the achievement of its business goals and meet the needs of its stakeholders. Human resources planning constitute the most important component of modern organizations. The accomplishment of organizational missions

Page 6

Human Resource Management Practices of Public Banks in Bangladesh

and objectives depends, to a large extent, on having right persons in right positions as well as the commitment and contributions of those involved. This is why human resource management has acquired a growing significance in current organization theory and practice in Bangladesh. As a matter of fact, a sound and effective human resource management is being seen as the most significant variable that determines the performance of an enterprise. Thus theorists and practitioners alike attach a considerable importance on the need for ensuring an efficient and effective use of proper Human Resources Planning. In Bangladeshi aspects HRM planning show the logical relationships between various elements of human resource management and underscore the importance of integrating them with the overall framework of the organization. (Huda, 2007) The matter has gained even more prominence in the recent conceptualization of human resource management in Bangladesh. Better known as Strategic Human Resource Management (SHRM) planning, it emphasizes, among other things, the following: (i) that it is human capability and commitment which distinguish successful organizations from others; (ii) that managing human resources is a matter of truly strategic importance; (iii) that human resource management is an activity which is to be owned by all managers; and (iv) that the key levers must be internally integrated with each other and externally integrated with the organizational strategies. Thus the current notion of human resource management goes beyond simple emphasis of the role of human factor and indicating for integrating personnel functions with general strategic framework of the enterprise. Bangladesh provides a typical case where the objective of developing a sound and rational system of human resource management remains illusory.

Page 7

Human Resource Management Practices of Public Banks in Bangladesh

Background information about Public Banks in Bangladesh

The banking system of Bangladesh is dominated by the 4 Nationalized Commercial Banks In which 3 is totally controlled by government and 1 (Rupali Bank) bank is controlled by both government and private sector. The nationalized commercial banks are: Nationalized Commercial Bank of Bangladesh: Sonali Bank Agrani Bank Rupali Bank Janata Bank

Sonali Bank LimitedSoon after independence of the country emerged as the largest and leading Nationalized Commercial Bank by proclamation of the Banks' Nationalization Order 1972 (Presidential Order-26) liquidating the then National Bank of Pakistan, Premier Bank and Bank of Bhwalpur. As a fully state owned institution, the bank had been discharging its nationbuilding responsibilities by undertaking government entrusted different socio-economic schemes as well as money market activities of its own volition, covering all spheres of the economy. The bank has been converted to a Public Limited Company with 100% ownership of the government and started functioning as Sonali Bank Limited from November 15 2007 taking over all assets, liabilities and business of Sonali Bank. After corporatization, the management of the bank has been given required autonomy to make the bank competitive & to run its business effectively. The corporate head quarter of the bank is located at Motijheel, Dhaka, Bangladesh, the main commercial center of the capital.Sonali Bank has an authorized capital of BDT 10 billion and has BDT 9 billion of paid up capital. With 1193 branches including two overseas

Page 8

Human Resource Management Practices of Public Banks in Bangladesh

branches, 3 subsidiaries and 3 representative offices, Sonali is by far the largest commercial bank of the country. Table 1.1: Background information about Public Banks in Bangladesh
Industry Type Company Sonali Bank Limited General Manager, Senior Officer, Officer General Banking, Deposit Schemes, Credit Schemes, Industrial Finance, International Banking Public Banks of Bangladesh Janata Bank Limited Manager, Senior Officer, Retail/Personal Banking, Credit programs, Micro Enterprises & Special Credit, Rural Banking / Credit Program, International Banking, Foreign Remittance and NRB Banking 1972 15109 4315 million 42 872 Bachalor degree 25000 N/A 6% Rupali Bank Limited Manager, Senior Officer, Agrani Bank Limited Manager, Senior Officer,

Interviews

Main Services

Personal Banking, General Banking, Corporate Banking, Business support, Credit Facility, Agri & Rural Foreign Currency Banking, SME Account, Services Banking, Banking to the society for NRBs, Merchant Banking, Islami Banking

Establishment year Number of Employees Total Asset ( US $) Average Age Branches Average Education Average monthly salary Number of Strike Day Employee Turnover Rate

1972 21839 8129 million 40 1193 Bachalor degree 25000 N/A 6%

1972 4293 1064 million 42 492 Bachalor degree 22000 N/A 9%

1972 13269 3311 million 40 876 Bachalor degree 22000 N/A 8%

Page 9

Human Resource Management Practices of Public Banks in Bangladesh

Agrani Bank Limited, a leading commercial bank with 876 outlets strategically located in almost all the commercial areas throughout Bangladesh, overseas Exchange Houses and hundreds of overseas Correspondents, came into being as a Public Limited Company on May 17, 2007 with a view to take over the business, assets, liabilities, rights and obligations of the Agrani Bank which emerged as a nationalized commercial bank in 1972 immediately after the emergence of Bangladesh as an independent state. Agrani Bank Limited started functioning as a going concern basis through a Vendors Agreement signed between the ministry of finance, Government of the People's Republic of Bangladesh on behalf of the former Agrani Bank and the Board of Directors of Agrani Bank Limited on November 15, 2007 with retrospective effect from 01 July, 2007.Agrani Bank Limited is governed by a Board of Directors consisting of 13 (thirteen) members headed by a Chairman. The Bank is headed by the Managing Director & Chief Executive Officer; Managing Director is assisted by Deputy Managing Directors and General Managers. The bank has 11 Circle offices, 25 Divisions in head office, 54 zonal offices and 876 branches including 27 corporate and 40 AD (authorized dealer) branches. The total number of employees is 13269. Rupali Bank Limited was established in a newly independent country of Bangladesh as a Nationalized Commercial Bank in the year 1972. RBL emerged through merger of three comparatively smaller private banks of the then East Pakistan. The three banks namely, Muslim Commercial Bank Ltd. Australasia Bank Ltd. and Standard bank Ltd. with all their assets, liabilities, benefits, rights, powers, authorities, and obligations, merged into one by the Bangladesh Bank (Nationalization) Order 1972 ( P.O.No. 26, 1972). Rupali Bank Ltd. came out as the largest public limited banking company of Bangladesh on 14 December, 1986. 93.11% of shares are owned by the government while the rest 6.89% are owned by private share holders.

Page 10

Human Resource Management Practices of Public Banks in Bangladesh

Rupali Bank operates through 492 branches. It is linked to its foreign correspondents all over the world. The Corporate Head Office of the Bank is located at Dhaka with one local office (Main Branch), four corporate branches at Dhaka, one in Chittagong and twenty-five zonal offices all over the country. The total number of employees is 4293. Janata Bank Limited is one of the biggest commercial banks of the country. Its a state owned bank that was formed just after liberation of Bangladesh. In fact it was a combination of two smaller banks namely United Bank Limited and Union Bank Limited. Janata Bank Limited, one of the state owned commercial banks in Bangladesh, has an authorized capital of Tk. 20000 million (approx. US$ 283.33 million), paid up capital of Tk. 5000.00 million, reserve of Tk.10823.01 million and retained surplus Tk. 5167.18 million. The Bank has a total asset of Tk. 345233.92 million as on 31st December 2010. Immediately after the emergence of Bangladesh in 1971, the erstwhile United Bank Limited and Union Bank Limited were renamed as Janata Bank. On 15th November, 2007 the bank has been corporatised and renamed as Janata Bank Limited. Janata Bank was converted to a limited company on 15 November, 2007. JBL provides all services of a commercial bank. Moreover it serves its clients with most modern banking products. Janata Bank Limited operates through 872 branches including 4 overseas branches at United Arab Emirates. It is linked with 1202 foreign correspondents all over the world. The Bank employs more than 13 (Thirteen) thousand persons.

Page 11

Human Resource Management Practices of Public Banks in Bangladesh

Methodology of the study

Scope and Objective of the Study This report is sort of case study, which means it is the illustration of the real scenario of the selected organization. So the scope of this report is limited. The first scope of this report is to have practical experience about how a research is done in the business organizations. The report has the scope to cover different aspects of HRM, which includes HR practices like recruitment, selection, and staffing procedures, selection devices, job analysis, job design, training & management development and compensation and benefit administration. It was part of my academic program to learn HR practices of Public Banks to understand real life scenario of business. Thus, this report does not go into deep of the HRM activities of the selected company, it is beyond this reports scope to make concentrated suggestions or recommendation other than narrating the observation and reach to a conclusion. The objectives of this study are as follow: To know about the Human Resources Department of Public Banks specially Sonali Bank limited. To know about the functions and practices of HRM. To identify the impacts of HRD on the Public Banking Sectors. To identify the current problems of HRD. To compare the current HRD system with international standards.

The study is qualitative in nature. In-depth interview of the company personnel, various official documents and brochures were used as instruments to collect information. The study contains a huge amount of data and information. In preparing this report, we had to follow some methods to collect information. This report is prepared according to the Primary data and information
Page 12

Human Resource Management Practices of Public Banks in Bangladesh

Secondary data and information.

Primary data and information: For collecting primary data and information we have followed interview method. We have collected our primary information through face-to-face interview with the employees of Public banks as well as the former manager of the Sonali Bank who are currently working in different private Banks. Their names and designations are Mr. Mohabbat Khan, Director, NCC Bank, Mr. Kallal Chakrabarti, Branch Manager, Bank Asia, Sheikh Mujib Branch, Chiittagong. We have interviewed him over phone. Secondary data information: For secondary data and information we have gone through different types of publications and published data. These are Various publications of Public banks and Human Resource Management Annual reports. Various reports were collected from internal bodies and library. Information collected from company websites.

Limitation of the study Despite the diligent efforts that have been put behind preparation of the report, we have only succeeded to skim the surface of the vast ocean of the subject. Though it was very challenging to prepare a report on human resource management of Public Banks. We encountered a major problem during the study. This problem was our limited exposure. 'Some of the company personnel were not helpful in providing information which they consider as confidential.

Page 13

Human Resource Management Practices of Public Banks in Bangladesh

Results and Discussion about the HRM Practices of Sonali Bank

Recruitment An effective approach to recruitment and selection can help an organization to maximize the competitive advantages by choosing the best pool of candidates quickly and cost efficiently (Kleiman, 2005). But successful recruitment and selection can be costly and time-consuming. Still, recruitment and selection is crucial for a business, because unsuccessful recruitment and selection can be responsible for the failure of the business. Thus the goal of a recruitment and selection program is to attract highly qualified candidates and ensure person-job fit (Fisher, Schoenfeldt & Shaw, 2004; Kleiman, 2005; Mathis & Jackson, 2005). The Recruitment and selection is a long process for any company and expensive. However a wrong recruitment and selection may cause the company to death. The world is changing every moment, so as the process of recruitment and selection criteria of Sonali Bank. There is quite a change between the recruitment processes of the Bank since 1972 till now. From 1972 to 1990, the only media that the Bank used to circulate its vacancy advertisement is to print the circulation through local newspaper. Between 1991 and 2010, the bank added some more media to advertise its job vacancies. The best media that the bank uses for their recruitment process is Internet. The bank has its own website career portal site, where they publish their new job openings to let people around the country knows about the positions they are looking for and the qualifications that the applicants must possess. The Bank is also using third party career website from the late 20s to reach the job seekers very quickly. There were no internet ser vices available in Bangladesh and the Sonali Bank was not computerized before 1991. So, it was difficult for them to provide this privilege to the job seekers to drop their CV online. Until 1991, There was no proper way of recruiting the employees for the Sonali Bank. Bankers Recruitment
Page 14

Human Resource Management Practices of Public Banks in Bangladesh

Center used to collect the CVs for the recruitment of the applicants and the selection used to be done by the association. The Sonali Bank Limited changed the process from 2006, when the bank recruited employees for their IT and technical department with the help of BUET. Table: 2.1: The Table on the Recruitment Criteria of Sonali Bank Limited Recruitment Criteria 1971-1980 Overall Industries 1 Advertisement in the Media Local Newspapers Bankers Professional Association Recruitment Committee (BRC) 3 Curriculum Vitae Do not take direct CVs but get it through BRC 4 Internet 1981-1990 Overall Industries Local Newspapers Bank Recruitment Association 1991-2010 Overall Industries Local Newspapers Bank Recruitment Association, BUET, IBA Accept Direct CV Online or by post with proper bank draft copy BDjobs, JobsA1, Company website

Do not take direct CVs but get it through BRC

N/A

N/A

In Sonali Bank Limited, there is a separate HR department that normally deal with preparing the new openings of the job vacancies, prepare the job description, include the required qualification of the candidates and prepare the advertisement. Most of the resume collection and short listing is outsourced either through the experienced career agencies, such as BDjobs, A1jobs, etc. or with the help of BRC, BUET or IBA. Sonali Bank also provides internal job circulation before posting it in the newspaper for recruiting from the general public. They most of the time try to fill their higher positions within
Page 15

Human Resource Management Practices of Public Banks in Bangladesh

their existing employees through promotion or relocation. Manager recommendations really work strongly for the employee to get shortlisted and then the Human Resource Department arrange an interview with the employee to check his/her job fitness. If they get the suitable person for the vacant position internally, they do not go for advertising their recruitment. Employee referral is highly ignored in the Sonali Bank Limited from the beginning till now. Selection Criteria Selecting an employee is a very crucial element of a Strategic HR Practice for the Bank. Wrong selection of a person can cause the Bank to lose its goodwill as well as the profit. Selection is a long process for the Public Bank. More than 1 million people apply for a position opened, from which only a few people get selected. In the Sonali Bank Limited, the selection criteria start with the initial screening. In the previous stage of the operation of Sonali Bank, prior to 2000, the bank outsourced to initially screen the resume to select the candidates, suite for sitting in the written test. The work used to be done by Bankers Recruitment Center. They used to check mostly the academic qualifications, previous work experiences and their other activities. From 2000, the Bank started to do the initial screening with the help of IBA. In 2006 Sonali Bank recruited a number of their IT and technical support employees from BUET through the help of BUET. They circulated the job vacancies in the BUET and interested candidates applied for the post. IBA Professionals help the Bank to shortlist the applicants and took written and verbal test from the candidates and found the best suite for the Bank. Finally the candidates gone through the Board interview with the Bank and the person selected for the positions got the letter of appointment. From 2006, the Bank started to do the initial screening using its own domestic branch employees. In 2009, over

Page 16

Human Resource Management Practices of Public Banks in Bangladesh

250 employees of all the different branches around the city screen the resume of the interested applicants and shortlisted the people that meet the academic qualifications and the experience needed to fill the vacant position. After the initial screening, the candidates used to go directly for the interview until 2000. Table 2.2: The table on the Selection Criteria of Sonali Bank Limited 1971-1980 Selection Criteria 1 Initial Screening Overall Industries Done Via Bankers Recruitment Center(BRC) Person Job Fit written Test Board Interview 1981-1990 Overall Industries Done Via BRC 1991-2010 Overall Industries BDjobs, BRC, IBA, BUET and the Bank itself Personality Test, Job Fit Written Test One on one interview, Board Interview Civil Servant, Banks own Physician Crime Record Check through City Corporation, Reference Check through calling. BODs take the final decision of selection

Employment Test

Person Job Fit Written Test Board Interview

Interview

Medical Check

Background Investigation Reference Check

Civil Servant, Banks own Physician Crime Record Check and through City Corporation, No Clear evidence of Reference Check BODs take the final decision of selection

Selection Decision

Civil Servant, Banks own Physician Crime Record Check through City Corporation, No Clear evidence of Reference Check BODs take the final decision of selection

However, there is a change in this criterion. The Bank organized a personality based test that each and every shortlisted candidates need to sit for. In this test, they ask several Multiple Choice Questions that they need to answer in a given particular time. Based on those MCQs, the candidates get screened for the second time and the candidates that get selected in the criterion,
Page 17

Human Resource Management Practices of Public Banks in Bangladesh

go for the written test to prove their knowledge, skills and analytical expertise. The Bank then arranges 2 interviews for the candidates to be selected for the position. The first interview is with the HR personnel asking mostly about the general knowledge and the industry related questions, and the final interview is with the BOARD. In this interview, mostly the candidates are given with a situation based case to deal with and check how the candidate reacts on that. After the final interview with the board of directors, the final decision of selection is chosen by the consultation of the Head of HR, BODs and the Department Head.

Page 18

Human Resource Management Practices of Public Banks in Bangladesh

Training and Development Table:2.3: Table on the training and development criteria of Sonali Bank Limited Training Criteria 1971-1980 Overall Industries 21 days 1 On-the-job Training orientation program 1981-1990 Overall Industries 21 days orientation program Sonali Bank 2 Class room Lectures N/A Staff College, HRD Training Cell Annual General Meeting Annual General Meeting 1991-2010 Overall Industries 21 days orientation program Sonali Bank Staff College, HRD Training Cell, BIBM Training Annual General Meeting Training on the 4 Audiovisual Techniques N/A N/A banking software use and updates Assign employees to 5 Job Rotation different workstation to develop skills and knowledge Assign employees to different workstation to develop skills and knowledge Assign employees to different workstation to develop skills and knowledge

Conference

A competent workforce underpins the success of any organization. It is crucial that staff possess the knowledge, skills and competencies required for optimum performance. Recognizing the training, development and learning needs necessary to equip staff with the capabilities required
Page 19

Human Resource Management Practices of Public Banks in Bangladesh

to contribute to business success and progress their careers is therefore key. There are quite a lot of changes are easily noticed in the training and development criterion of Sonali Bank. From 1972 to 1980, the Bank used to provide on-the-job training by offering 21 days job orientation under different sections of the department that the staff is appointed to. The Bank is still following the same method of providing on-the-job training. However, there are quite a few new changes since 1981 till 2010. Between 1981 and 1990, Sonali Bank started its own training institute, named Sonali Bank Staff College and also HRD training Cells. The Bank started to provide all the necessary classes for the employees needed to make them competent enough. From 1991 to 2010, Sonali Bank also made arrangement with BIBM training center to provide various trainings to the Sonali Bank employees to increase their knowledge and skills. From 1972 till now, annual general meeting is working as a strong tool to develop the knowledge of the employees and share each others opinions. Sonali Bank is providing training to its employees about the technical advancement of their products, software usage and updates by using the help of audio-visuals. The most common training provided by the Sonali Bank to its employees is the job rotation. The purpose of this training is to make the employee multi-task oriented.

Page 20

Human Resource Management Practices of Public Banks in Bangladesh

Promotion Criteria& Performance Appraisal Table 2.4: Table on the promotion and performance appraisal criteria Promotion Criteria and appraisal

1971-1980 Overall Industries

1981-1990 Overall Industries

1991-2010 Overall Industries Promotion of the is employee the depends 15% on the length of their service N/A

Length of Services

Promotion is Promotion based on the based on seniority rather seniority than the merit N/A N/A

Recommendation by Direct Supervisor Based on Merit Annual Right Confidential Attitude and Report Values (ACR) Knowledge and Skills

ACR carry 50% ACR carry 50% ACR carry 50% of the total of the total of the total weight of weight of weight of Promotions and Promotions and Promotions and appraisal appraisal appraisal Done through Is based on the Is based on the Promotion personal Profile personal Profile committee of of the employee of the employee Banks and personal File

Performance Evaluation

In the Sonali Bank, no promotion takes place through recommendation by direct supervisors. The employees need to sit for an exam for the promotion. The score of the written test carries 50% of the total weight of promotion and appraisal. This ACR exam mainly focuses on the merit of the employees, their right attitudes and values, and finally the knowledge and skills about Sonali Bank as well as the industry. Employees length of service also carries 15% of the weight since 1991. Before 1991, In the Sonali Bank, the promotion was based on the seniority rather
Page 21

Human Resource Management Practices of Public Banks in Bangladesh

than the merit. For evaluating the employees performance, Bank manager used to take employees personal profile into account only. From 1991, Bank does not merely rely on the personal profile of the employees. It carries only 15% of the total weight. The appraisal is done through the promotion committee of Banks. This special committee consists of 4 people, who are appointed by the Bangladesh Bank and assess thoroughly all the records of the employees. The report from the promotion committee of Banks carries 10% of the weight for promotion. Supervisors appraisal also carries 15% of the total weight. The employee who will make the highest score, will get the promotion.

Page 22

Human Resource Management Practices of Public Banks in Bangladesh

Compensations, Benefits and Industrial Relation Table 2.5: Table on the compensation, benefits and industrial relations criteria of Sonali Bank. Compensations, Benefits and 1971-1980 Industrial Relations Overall Industries Pay structure of the National Pay scale government of Bangladesh 50% of the Basic House Rent Salary Allowance Medical Allowance 25% of the Basic

1981-1990 Overall Industries National Pay scale 50% of the Basic Salary 25% of the Basic

1991-2010 Overall Industries Revised National Pay scale 2009 50% of the Basic Salary 25% of the Basic

1 2 3

Leave with pay

Annually 20 days

Annually 20 days According to the company policy 15 days per Annum

Annually 20 days According to the company policy 15 days per Annum

Children Education According to the company policy Facility Sick Leave 15 days per Annum

Maternity Leave

3 Months Equivalent to the one Basic Salary Provide loans for motorcycle and housing Has great influence on the Human Resources and Banking Operation

3 Months Equivalent to the one Basic Salary Provide loans for motorcycle, car and housing Has great influence on the Human Resources and Banking Operation

3 Months Equivalent to the one Basic Salary Provide loans for motorcycle, car, computer and housing Has great influence on the Human Resources and Banking Operation

Bonus

Loan Facility

10 Labor Union

Page 23

Human Resource Management Practices of Public Banks in Bangladesh

Sonali Bank Limited is following the national pay scale set by the government to pay the basic salary to its employees. From the 2009, the pay scale of the Bank has changed according to the revised pay scale of the national pay scale. Sonali Bank pays housing allowances to all its employees, which is 50% of their basic salary and 25% of the basic salary as their medical allowances. Each employees of the Sonali Bank are entitled to get 20 days of paid annual leave after completion of successful year of services. Paid sick leaves are set not more than 15 days per annum. And the company provides maternity leave of total 3 months to the pregnant ladies employees. The maternity leave is normally taken 6 weeks of leave before the delivery of the baby and 6 weeks of leave after the delivery of the baby. Male employees are entitled for 5 days of paternity leave during the birth of his child. The Bank provides 2 festival bonuses and one annual bonus for all the employees. The amount of each bonus is equivalent to one basic salary of the employee. There is no performance based bonus offered by the Sonali Bank Limited since 1972 till 2010. The bank is also providing other fringe benefits to its employees, such as loan facilities. The company gives loan to its employees with a very reasonable interest in return. The loans that the employees can applied for are housing loan, car/motorcycle loan and also computer loan. The computer loan is included in the list since 2004. Employees of the Sonali Bank have given the right to join the labor union according to the banking and labor law. This union work to ensure the fair treatment to all the employees. They work for the right of the employees. In the Bank, there must not have more than 2 unions. The Human Resources and the banking operation is highly influenced by the labor unions. Banks labor unions are very strong.

Page 24

Human Resource Management Practices of Public Banks in Bangladesh

Future Implications and Conclusion

HRM in the Public Bank in Bangladesh can be streamlined further for effective public administration for enhanced development and efficient service delivery. However, for that to happen, focus should be devoted on the issues of decentralizing the personnel management system, reforming and strengthening the central HRM agencies (i.e., MoE and PSC) through securing ethics and professional integrity and increasing the pay scale of the employees. Emphasis should be placed on career management issues so that eligible candidates can be recruited, retained and rewarded and they are motivated and find it attractive and eventually perform well in delivering services. Commenting on the changes required in PHRM, a recent UNDP report states that HRM (in Bangladesh) should change (a) from generali st traditions to specialized generalists, with strengthening of expertise and openness; (b) from seniority-based promotion, to promotion based on performance evaluation and competence, using fair and transparent competition; (c) from inadequate appraisal and merit concepts, to the strengthening of individual performance management through more articulated review systems; and (d) from frequent and often unpredictable rotation of posts to new practice, strengthening of specialization through the career development programs (UNDP, 2007). It has been uncovered that the overall status of HRM practices in the public Banks of Bangladesh is moderately satisfactory whereas the overall status of HRM practices in the private Banks is found to be satisfactory. It is unearthed that significant difference is prevailing between the public and the private Banks of Bangladesh with respect to the overall status of HRM practices where the private banks are in significantly better position. The following implications may be useful to consider in improving the overall status of HRM practices of the public and the private banks of Bangladesh.
Page 25

Human Resource Management Practices of Public Banks in Bangladesh

Implications for the future betterment of the HRM practices in the Public Banks manpower requirement data should be maintained, HRIS should be introduced., Succession planning should be conducted, HR policies should be changed with respect to business strategies, Job analysis should be conducted, Fairness in selection process should be upheld, Psychological attributes should be focused in selection, different sources of recruitment should be utilized, Extensive training and development programs should be offered, TNA should be conducted accurately, Further training and education should be encouraged, Sufficient budget for training should be allocated, Performance appraisal system should be effective, Compensation practices should be totally restructured, Industrial relations should be strengthened, Wide-ranging training and development should be continuously offered, Financial and non-financial benefits should be extended. As of the in depth study in the public banking sector and also studying the HRM practices of some private Banks in Bangladesh, what we have found is that, there are plenty of traditional HRM practices that is followed by the public banks of Bangladesh need to be revised according to the human resource environment changes. They should focus more on the training and development of their human resources. This is the only way that they can make these human resources as human capital. Sonali Bank also needs to try adapting some HR strategies from the international public banks to maintain its share in the market pie and improve its services to the customers.

Page 26

Human Resource Management Practices of Public Banks in Bangladesh

Bibliography

Ahmed, F. (2001). Strategic human resource management: Linking human resource management with corporate strategy. Journal of Business Studies, Vol. 12, No 1, pp. 5973. Arthur, J 1994, Effects of human resource systems on manufacturing performance and turnover. Academy of Management Journal, Vol. 37, No. 3, pp. 670-687. Budhwar, P & Debrah, YA (Eds.) 2001, Human resource management in developing countries, London: Routledge. Dessler, G 2007, Human resource management, New Delhi: Prentice Hall of India Private Limited. Huda, K. K. (2007). HRM practices & challenges of non-government development organizations:An empirical study on Bangladesh. Journal of Management, Vol. 9, No.1, pp. 35-49. Huselid, M 1995, The Impact of human resource management practices on turnover, productivity, and corporate financial performance. The Academy of Management Journal, Vol. 38, No. 3, pp. 635-672. Ichniowski, C, Shaw, K & Prennushi, G 1997, The effects of human resource management practices on productivity: A study of steel finishing lines. The American Economic Review, Vol. 87, No. 3, pp.291-313. Katou, A & Budwar, P 2007, The effects of human resource management policies on organizational performance in Greek manufacturing firms. Thunderbird International Business Review, Vol. 49, No. 1, pp. 1-35.

Page 27

Human Resource Management Practices of Public Banks in Bangladesh

Moyeen, A & Huq, A 2001. Human resource management practices in business enterprises in Bangladesh. Journal of Business Studies, Vol. 22, No. 2, pp. 263-270. Rab, A. 1. Management pattern and problems of small enterprises of Bangladesh. Journal of Business Administration, Vol. 17, No. 3&4, pp. 34-51. Schuler, S 1990, Repositioning the human resource function: Transformation or demise? Academy of Management Executive, pp. 49-60. Shelly, M. (1994). Human resource, infrastructure, and industrialization in Bangladesh,. Private Sector Growth: Creating Conducive Environment, Dhaka, Bangladesh. UNDP (2007), Building 21st Century Public Administration in Bangladesh: Formulation Mission Report, Dhaka: UNDP Werther, W & Davis, K 1996, Human resources and personnel management, New York: McGraw-Hill, Inc.

Page 28

Human Resource Management Practices of Public Banks in Bangladesh

Appendices
Table A: National Pay Scale.

Page 29

Human Resource Management Practices of Public Banks in Bangladesh

Organogram

Page 30

Human Resource Management Practices of Public Banks in Bangladesh

Annual Magazine of Sonali Bank Limited

Page 31