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CHAPTER 2: LITERATURE REVIEW
2.2: Human resources:
Human resources is a term used to refer to how employees are managed by organizations, or to the personnel department charged with that role. The field has moved from a traditionally administrative function to a strategic one that allegedly recognizes the association between talented and engaged people and organizational achievement. The field draws upon concepts developed in Industrial/Organizational Psychology and System Theory. Human resources have at least two related interpretations depending on context. The original usage derives from political economy and economics, where it was traditionally called labor, one of four factors of production although this perspective is changing as a function of new and ongoing research into more strategic approaches at national levels. This first usage is used more in terms of 'human resources development', and can go beyond just organizations to the level of nations. The more traditional usage within corporations and businesses refers to the individuals within a firm or agency, and to the portion of the organization that deals with hiring, firing, training, and other personnel issues, typically referred to as 'human resources management'
2.3: Employment Definition:
Torrington et al. (2003) said, "An employment contract comes into existence when an unambiguous offer of employment is made and is unconditionally accepted." It implies that, employment contract take place when an employer offer a job to any applicant and the applicant accept that offer without any condition. It is always not necessary that the employment contract should be only on written form.
Due to the increased competition in the global economy, changing pattern of the business and technological advantages more organizations are practicing flexible pattern of employment. Scholz et al. (2008) said that, flexibility is one of the major characteristic of the new employer and employee relationship. Flexibility pattern of work creates different types of employment beside full time work contract such as part time work, shift work and temporary contract etc.
Like most other organizations in the Bangladesh, Grameenphone also uses the flexible working practice and various types of employment to achieve their business goal and competitive advantage. Now we will see the different types of employment contract are practice by Grameenphone.
2.3.1: Part time Employee:
We defined Part-time work as regular wage employment in which the hours of work are less than normal (Thurman & Trahs, 1990). In the United States, part time work is generally defined as less than 35 hours a week. Canada and the United Kingdom normally use 30 hours as the cut off for part-time (Kahne 1992). In France, part-time is defined as at least 20% below the statutory level of working hours (which became 35 hours on January 1, 2000), while in Germany it is less than 36 hours of work per week (Houseman 1995). By contrast, part-time employment in Japan is explicitly related to status within the firm and not to hours worked; indeed, recent Japanese surveys indicate that 20-30% of those classified by their employers as "part-time" actually work as many hours as "full-time" workers (Houseman & Osawa 1998).
The rate of part-time work in Europe is about 16% of the European Union's total labour force working part-time in 1996 (Fagan 1999) which has a wide variation among countries (Bosch et al 1993). In the Netherlands, about 38% of the labour force, and 69% of women, work part-time which leads (Freeman, 1998) to characterize it as the "only part-time economy of the world, with a finger in the dike of unemployment." Part-time employment is also relatively common in Scandinavia with over 20% of the labour force working part-time. By contrast, part-time work constitutes relatively small proportions of the labour force in Greece, Spain, Portugal (De Grip et al 1997, Tregaskis et al 1998), and Italy (5% overall, 3.5% of women) (Thurman & Trah 1990). On the other hand, part-time employment is increasing relatively rapidly in Europe, where it has been used as a way to lighten unemployment and is the major source of employment growth since the 1980s (Brewster et al 1997).
The advantages of hiring full-time staff are uncountable. As most people work only one full-time job, employers are more likely to have control over the employee's time and to get increased employee loyalty from them. Employers also have the peace of mind which will be ensure that someone around to "mind the store" in their absence. It is also possible for a running business which needs day ahead sells, a full time workers also help to improve business by increase buyers. By looking and computing payroll taxes, it will found some disadvantages of full time employees. Full-time employees receive benefits such as health insurance and paid vacation. Will you have to provide these types of benefits to be competitive? Who will do your employees' work while they're away?
2.3.2: Full time Employee:
Full-time employment is a kind of employment by which the employee works the full number of hours defined as such by his/her employer. Full-time employees are getting a lot of benefits that are not typically offered to part-time, temporary, or flexible workers, such as annual leave, sick leave, and health insurance. To make a career, employees are continuing as a full timer and most of the case, they get more than jobs, and usually carry more hours per week.
Companies are making their own time schedule for Full-time employees which based on the shift the employee must work during each workweek. The "standard" workweek consists of five eight-hour days, totaling 40 hours. While a four-day week generally consists of four ten-hour days, it may also consist of as little as nine hours, or ten hours including a half-hour lunch (full-time being 40, 36, or 38 hours respectively). Twelve-hour shifts are three days per week, thus 36 hours is always full-time, compensating slightly for the greatly increased fatigue which a person experiences on such long shifts. Retail store offers irregular shifts to the employee but are still full-time if the required number of hours is reached.
The fulltime work schedule has differed country to country. The most common full-time workweek in the U.S. is between 32-40 hours. In France it is a government-mandated 35 hours per week. In Germany it is between 35-40 hours per week, and in Denmark it is 37 hours per week. In Australia it is around 35-37 hours per week, and in the U.K., whilst there is no formal definition, it is generally considered to be 35 hours a week or more. Overtime employees' works more than full time and get extra per-hour wages which does not including in their salary.
2.3.3 Temporary employee:
According to Torrington et al. (2005) "Temporary contract are for people employed explicitly for a limited period." It implies that where someone is employed to carry out a specific task but under a permanent contract, though expiry date is not obvious to mention.
In 2003, 6.4% of all the UK employees used to work under some form of non permanent contract (Labour Market Trends, 2003b). However, this trend increases among employers during the high unemployment rate in the society.
Seasonal fluctuations are one of the obvious reasons behind employ temporary employees. Geary (1992) claimed that, because of enjoying greater control over labor, managers have a preference for temporary staffs. To get a permanent contract they sometimes work beyond their contract, their absent level is low as well (Torrington et al. 2005). It implies that, temporary staffs work harder, less absenteeism rate to achieve a permanent contract.
On the other hand, managers want to take some advantages of the situation and put extra work load for the temporary staffs. According to Geary (1992), sometimes existing employees might not see the temporary staffs as part of their team.
Employment agencies, job centre and window advertisement are effective ways of recruit temporary employees. Word of mouth also can be an effective way to recruit the temporary employees. Grameenphone uses the entire above mentioned contract to employ their employees. They use full time contract for management level and sometimes for shop floor workers where required. Due to the cultural diversity and to cope with the various employment regulations they also use part time contract widely for all levels. Grameenphone employ temporary staffs every Eid festival period to cover the rush phase of the business. Sometimes they give the permanent contract to some temporary staffs after finishing their temporary contract. Grameenphone also employ temporary staffs to cover any maternity holiday.
HR at GP has specific mission and objectives that made them more distinct in the organization.
Human Resource practices in Grameenphone Company
2.4 Human resource planning
Effective human resource planning (HRP) can be one of the most rewarding aspects of work in human resource management. Effective planning can enhance the success of the organization while minimizing the amount of suffering resulting from poorly anticipated labor surpluses or shortages.
In the line of business plan, HRP at GP starts. HRP is tagged with business Plan such as potential investment, subscribers, market shares etc. There is a strong correlation between subscriber and employees requirement.
2.5 Demand of Human Resource
Forecasting of Human Resource Demand is done fully on Judgment. The method in this respect used is bottom-up forecasting. Each unit, branch or department estimates its own future need for employees. The sum of the estimated unit needs is the demand forecast for the whole organization.
2.6 Historical Background
Human resource management practices (Performance appraisal) have been shaped by many historical forces. The history of HRM can be characterized as moving through four broad phases, the craft system, scientific management, the human relation approach, and the current organizational science-human resource approach. As we move through the first decade of the twenty first-century, there can be little doubt that human resource management faces some of the greatest challenges since its definition as a separate staff function almost a century ago. This renewed formulate systems from numerous influences, new organizational forms, global competition, and the increased feeling that organizations are vehicles for fulfilling societal goals. Factors like corporate reorganizations, increasing diversity in the work force, employee expectations that have forced human resource management to be transformed from a narrowly defined specialty into a more strategic function. HR managers play an important role in linking HRM practices with the strategic goals of the organization.
HR practice in Bangladeshi organizations is getting institutionalized day by day. It got a formal and full-fledged shape in many organizations. The Bangladesh Society for Human Resource Management (BSHRM) has been established to give the HRM practice a momentum in institutional level. The HRM practice at GP has achieved a formal and structured shape as well. To study on HRM practice in such an organization will give an insight about to what extent the HR department is contributing toward organizational goal achievement.
2.7 DEFINITION OF RECRUITMENT:
Recruitment involves on the lookout for and attracting a pool of people from which qualified candidates for job vacancies can be chosen. It is one of the key issues of employee resourcing. Generally recruitment is the process of identifying and attracting potential candidates from within and outside of an organization to begin evaluating them for fill up an established vacancy. According to IDS study (2003), "The potential success of any recruitment process rests to a great extent on the quality of its applicants." It is very important for the organizations that they have an effective and high-quality recruitment process in place as it helps them to achieve high organizational performance and minimize the labour turn over. It is a linking activity - bring together those with jobs to fill and those seeking jobs (DeCenzo and Robbins, 1998). An effective recruitment process includes various stages like - verifying that a vacancy exists; job analysis (define the task, duties and responsibilities) through job description; personal specification, advertising the vacancy through various media as job centres, employee referrals, posters, word of mouth etc. Once these stages are followed and candidates are identified, organization can proceed towards the next step - the selection process. However Barbar (1998) suggest that, recruitment process should not be finish at this point; employers need to continue the process until an offer is made and accept.
2.8 TYPES OF RECRUITMENT:
Human Resource Departments manage the recruitment function and they follow some specific procedures for recruitment. Recruitment can be done by following two major approaches as internal and external recruitment approach. However, many organisations prefer to invite applications from internal candidates before they look to their external labour markets for new staff (Newell and Shackleton 2000; CIPD 2003). This approach is less expensive than external recruitment. Torrington et al. (2005) also claimed that, internal candidates are more knowledgeable than external candidates which is not true in always though internal candidates are more familiar with organization culture, rules and geography which take them less time to settle but a qualified external candidate can adopt these things in a short time. Through following only internal recruitment approach, employers are only able to stem limited field of candidates. According to Institute of Employment Studies (2002), serious problems like bitterness, jealousy and low morality occurs if candidates fail to be selected.
2.9 DEFINITION OF SELECTION:
According to Gatewood and Field (2001), "Selection is the process of collecting and evaluating information about an individual in order to extend an offer of employment." Dowlin et al. (1994) supported the above statement by saying that, "Selection is the process of gathering information for the purposes of evaluating and deciding who should be employed in particular jobs." It implies that selection is the process of gathering information's to make an employment offer to the candidates. Torrington et al.(2005) claimed that, different stages of selection process provides information for both employer and employee towards each other and those information's help both of them to reach a decision. As a result the tag the selection as a two way process. On the other hand Harriot (1989) describes selection as 'Social Process' as he seen the process as a part of social relationship among organization and individual in real time (Lofquist and Dawis 1969; DeWolff and Van den Bosh 1984 cited in Herriot 1989).
2.10 IMPORTANCE OF RECRUITMENT AND SELECTION
A high quality of recruitment and selection process is important for building a strong, motivated, creative and loyal work force. In the recent competitive business world, it is very tough to get competitive advantage over the rival organizations. Boxall (1996) cited in Marchington and Wilkinson (2005,p 275) that, 'capturing a stock of exceptional human talent' is the most effective way to achieve the competitive advantage. Duerr (1986) supported the statement by saying that, for the organizational growth it is important to have the right people in the right place at the right time. Other resources like technology, finance and equipments can be copied or acquired but not the human talent. Hence, each and every steps of the recruitment and selection process should be taken carefully to get the right person on board. Rynes et al. (1991, p2) said, "Applicants can be wooed not only through improved job attributes but also through better planned and more attentive recruitment process." On the other hand, Rynes et al. (1991) also found that, due to poor recruitment and selection process individuals losing interest in jobs.
The organizations fails to imply a good quality recruitment and selection process can be end up with selecting wrong person for them. DeCenzo and Robbins (1998) found that problems occur when rejecting candidates who would later perform successfully on the job (reject error) or accepting those individuals who perform poorly on the job (accept errors).They could face resignation or dismissal of that employee and higher turnover in organization could pull them back financially. Jain (1974) also claimed that, inappropriate recruitment process are not only financially costly but also create employee dissatisfaction and 'are contrary to society's goal of manpower usage'. Moreover, employer needs to use extra time and effort for further recruitment.
It is also important that, new recruits show a willingness to learn, adaptability and ability to work as part of a team as the organizations needs to adopt the changes to be successful in competitive business arena. Though it is not the only one but the most practical way to employ such motivated, talented, creative and loyal employees and make the organization successful in the long run, is place an effective and efficient recruitment and selection process.
2.11 Types of Recruitment Methods
There are various stages of recruitment process. According to Cowling (1998) "the primary concern of recruitment is the development of a reputation as good employer who attracts good quality applicants." Employers need to choose cost effective & appropriate method from various approaches in order to the circumstances. Torrington et al. (2005) said, for this reason employers uses different recruitment methods at different times.
GP uses both internal and external sources of recruitment. The internal sources are mainly used for promotion from entry-level to mid-level managerial positions. The external source is used extensively to recruit for the entry and upper-level management positions and also for the technical posts.
GP uses informal as well formal method for recruitment from the various sources.
2.11.1 The informal methods:
Promotion from within for mid-level positions
Employee referral for upper level management and technical positions
Walk-ins for part-time and entry level positions
2.11.2 The formal methods:
Advertisement in renowned newspapers, mostly they use 'The Daily Ittefaq,' 'The Bangladesh Observer' and 'The Daily Star'
Online advertisements like in the web site of Grameenphone.
Computerized resume services
Headhunters or employee leasing firms like 'Eshna Consultants' for upper level management position
Job fair for entry-level positions
Promotion from within
Web site ads
Computerized resume service
Executive search firms
The recruitment system can be graphically represented as shown in Figure-1
2.12 Effect of new employees in the internal labor market:
Brewster et al. (2004) said, "Labor market remains a challenge for recruiters". Employee recruiting from the internal or external labor market is an important concern for the recruiters. Some researchers said, recently the decision regarding employee recruitment from internal or external labour market has been affected by tight labor market (Cascio, 2004).
Recruiting employees from the internal labour market is cost effective, time consuming and a motivational factor for the existing employees. Atterbury et al.(2004) said, organizations save money through internal recruitment as they do not need to do external advertisement , there is no need for induction program and doesn't need to waste any time for settling in the organization. It is also considered as good HR practice for the organizations and the successful candidate work as a motivational factor for the existing workforce. Above table shows 46% of the British firms recruitment more than half of their unskilled workers by using the internal labor market channel. However, Manwaring (1984) said, "The use of this channel discriminates against 'outsiders' without close connections to the firm's work force. This method also reduces the number of potential applicants, can create bitterness among the unsuccessful employees.
On the other hand, if recruiters employ the people from the external labor market, they also have both positive and negative impacts. If any recruiter advertises any vacancy in the external labor market, it means they have a wide range of potential candidates to fill the vacancy. New employee can bring so many new ideas, concept and vision of work. Rao (2005) claimed that, when a new employee comes from the external labor market, they bring wide range of experience with them and it reduces the unemployment rate in the society. However, this method is expensive due to the requirement of external advertising and follows the proper selection process and it takes longer time to finish the process.
It seems that, through whatever the methods the employee be recruited in the organization, new employees have both positive and negative effect in the internal labor market as they bring new ideas, creating more competitive advantages and reduce the unemployment rate in the society. Wilson said, new employees mostly contribute good effects to the organization and to it's existing employees either conscious or unconsciously.
However, when a new employee comes into the labor market there are few negative impact as well. Like sometime existing employees might feel overlooked, it could create bitterness among the employees.
In the Bangladesh there are different policies and practices in operation among the different sectors or among the organizations in the same sector or in the different sections of the same organization. Grameenphone follows both internal and external methods to recruit their employees depend on the business strategy or the position to fill up. As a well reputed employer, they try to utilize the positive impacts of both (internal and external) methods as much as possible and reduce the negative impacts to achieve the competitive advantages. Finally, we can say that, Peacocks is using the 'mixed bag' policy to recruit their employees at different levels.
2.13 The process of Recruitment and Selection:
Recruitment and selection is usually series of stages. Candidates must be successfully cleared each step before proceed to the next one.
According to Rao (2005), the amount of time and emphasis provided on each steps and even the sequences of the process vary from organizations to organizations and even from job to job in the same organization. However, it is always not necessary that the process should be different in the same organization for different position.
Response to vacancy
Carry out selection programme
Make job offer(s) and finalise contract
Evaluate effectiveness of recruitment and selection process
Figure 1: Typical organizational Recruitment and selection stages (Adopted from Chris Javis, 2003)
From the above figure, we can see that in the first stage a vacancy arise in the organization and employer try to see their staffing plan by themselves before go to the next stage. Once they finalize the first step, in the next stage employer want to analyze the job, define the target groups and update the job description for the vacant position. In the third stage, they finalize the terms and conditions of employment, employee reward package etc. before they go to the next stage. Next stage is communicating the vacancy, in this stage employer decide how they will recruit the employee (internally or externally), and they finalize a method of recruitment in this stage. At the next stage (process application), try to compare the applications or CV's, do the short -list and invite the successful candidate to the next stage for selection process. In the next stage, employer tries to finalize their selection by implementing different selection tools (interview, work sample etc.). At the following stage, employer completes the selection and confirms the terms and conditions of employment with the employee and arranges a job start date including induction program. In the final stage, employer tries to find the effectiveness of the recruitment and selection methods they used through employees productivity, turn over rate etc.