Human Resource Policies

Table of Content

Introduction Human resources are the source of achieving competitive advantage because of its capability to convert the other resources (money, machine, methods and material) in to output (product/service). The competitor can imitate other resources like technology and capital but the human resource are unique. According to Khatri (1999), people are one of the most important factors providing flexibility and adaptability to organizations. Rundle (1997) argues that one needs to bear in mind that people (managers), not the firm, are the adaptive mechanism in determining how the firm will respond to the competitive environment.

Several scholars have noted that managing people is more difficult than managing technology or capital (Barney, 1991; Lado and Wilson, 1994). However those firms that have learnt how to manage their human resources well would have an edge over others for a long time to come because acquiring and deploying human resources effectively is cumbersome and takes much longer (Wright et al. , 1994). The effective management of human resources requires sound Human Resource Management (HRM) systems. HRM is a distinctive approach to employment management.

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It seeks to obtain competitive advantage through the deployment of a highly committed and skilled workforce using an array of techniques. In order to develop a sound HRM system, the organization should have effective Human Resource Management practices. HRM practices refer to organizational activities directed at managing the pool of human resources and ensuring that the resources are employed towards the fulfillment of organizational goals. HRM practices may differ from one organization to another and from one country to another. Company Background British American Tobacco Co.

Ltd. British American Tobacco is the second largest tobacco Company in the world. It is based in London, UK. British American Tobacco Bangladesh The presence of British American Tobacco in this part of the world can be traced back to 1910. Beginning the journey as Imperial Tobacco 100 years ago, the Company set up its first sales depot at Armanitola in Dhaka. After the partition of India in 1947, the company was established in 1949. It then became Bangladesh Tobacco Company Limited in 1972 immediately after Bangladesh’s independence. In 1998, the Company changed its name and dentity to British American Tobacco Bangladesh Company Ltd. British American Tobacco Bangladesh is one of the oldest and largest multinational companies operating in Bangladesh. The UK-based British American Tobacco Group holds 65. 91% share in the company the rest by the Bangladesh government and other shareholders. British American Tobacco Bangladesh began its operations in the sub-continent in the year 1910 as Imperial Tobacco Company Ltd. After independence, in 1972, Bangladesh Tobacco Company (BTC) was formed with British American Tobacco holding majority of the shares.

In March 1998, Bangladesh Tobacco Company changed its corporate name into British American Tobacco Bangladesh proclaiming its common identity with other operating companies in the British American Tobacco Group. At British American Tobacco Bangladesh, the key factor to their sustainable growth is human resource. Therefore, they have always been committed to good recruitment and employment practices British American Tobacco Bangladesh (BATB) is one of the pioneer cigarette manufacturers in the world. The company was formed at the turn of the 20th century with the objective of establishing a worldwide business.

Today British American Tobacco sells the leading brands in over 30 markets covering 102 countries, has more than 200 brands worldwide, employs more than 55,000 people and produces some 2 billion cigarettes every day. British American Tobacco Bangladesh Company Limited is one of the largest private sector enterprises in Bangladesh, incorporated under the Company’s Act 1913 on 2nd February 1972. BAT has over the decades consistently invested in Bangladesh market through Bangladesh Tobacco Company (BTC).

Thus BTC has always been on the business of manufacturing and marketing different brands that meet the standards found everywhere in the world. Objective We had a number of objectives for carrying out this study. * Knowledge about Human Resource Policies and Practices in External and Internal Environment of an organization. General knowledge about how HRM helps companies achieving competitive advantage by studying different types of books and journals. * Knowledge about Human Resource Policies and Practices in External and Internal Environment of British American Tobacco Bangladesh Limited. * To clarify about the concepts of the specific imension of c – by doing this report we have come to know a lot about HRM policies and practices as well as their contributions for gaining competitive advantage of a highly efficient and productive organization like BAT. * To gain experience about writing a formal report- the report that we have made follow international and formal standards. * Our faculty asked us to do this research SCOPE These studies, as well as other studies that were undertaken to provide information about the importance of implementing HRM policies and practices to get competitive advantage for today’s business dynamic arena.

We considered BAT for this particular research. We tried to find out does BAT BD consider HRM policies and practices an important factor and how they implement it. Several approaches have been used to address these questions. This study summarizes some of the descriptive information, as well as information from the historical record, and also primary data collected from interviewing the employees in an attempt to describe the evolution of the true scenario prevailing within the BAT BD. All of this work has been carried out within the office of BAT BD corporate office, situated in Mohakhali, New DOHS Dhaka.

LIMITATIONS Even though we were highly motivated to cover all the aspects required by the report, we often found ourselves in a position where we were having great difficulty in getting the desired information in an appropriate manner. We had to face the following limitations in the process of preparing the report: * At times, employees being somewhat hesitant about answering our queries regarding internal and external HRM policies and practices of the company. This was a major drawback for us because we did not have any secondary sources of information about their HRM system. METHODOLOGY

Research Design: To gather information about the topic provided to us, we prepared a set of questions for interviewing the employees of BAT Bangladesh Limited. Structured questions helped us to conduct our research quickly without wasting much time of the interviewers. Data collection: * Primary source- For our primary research, we took interviews with employees. We had set questions, which were asked to them regarding the company’s HRM policies both in external and internal environment. Secondary source-For our secondary research, we used some of the books, journals and articles related to the topic.

We also took help from the company’s annual prospectus. Literature Review Developments in the field of HRM are now well documented in the management literature ( Boxall, 1992; Legge, 1995; Schuler and Jackson, 2007; Sisson and Storey, 2000; Torrington et al. , 2005). The roots of HRM go back as far as the 1950s, when writers like Drucker and McGregor stressed the need for visionary goal-directed leadership and management of business integration (Armstrong, 1987). This was succeeded by the ‘behavioural science movement’ in the 1960s, headed by Maslow, Argyris and Herzberg.

These scholars emphasised the ‘value’ aspect of human resources (HR) in organisations and argued for a better quality of working life for workers. This formed the basis of the ‘organisational development movement’ initiated by Bennis in the 1970s. The ‘human resource accounting’ (HRA) theory developed by Flamholtz (1974) was an outcome of these sequential developments in the field of HRM and is considered to be the origin of HRM as a defined school of thought. HRA emphasised human resources as assets for any organisation.

HRM can act as a key means to achieve competitive advantage in organisations (Barney, 1991) Many researches on HRM practices have been conducted from time to time and researchers have identified different practices by different names. As quoted in (Kok Jan de et al. , 2003), researchers variously refer to certain sets of HRM practices influenced by the HRM profession as “best practice,” or “high-performance” (Huselid, 1995), “formal” (Aldrich and Langton, 1997; de Kok and Uhlaner, 2001; Heneman and Berkley, 1999), “sophisticated” (Golhar and Deshpande, 1997; Hornsby and Kuratko, 1990; Goss et al. 1994; Wagner, 1998) or as “professional” (Gnan and Songini, 2003; Matlay, 1999). Pfeffer (1994; 1998), argued the most appropriate term is “Best HRM Practices”. But according to Chandler and McEvoy (2000) , one of the lingering questions in HRM research is whether or not there is a single set of policies or practices that represents a ‘universally superior approach’ to managing people . Theories on best practices or high commitment theories suggest that universally, certain HRM practices, either separately or in combination are associated with improved organizational performance.

Researchers have also found that those well-paid, well motivated workers, working in an atmosphere of mutuality and trust, generate higher productivity gains and lower unit costs (Boxall, 1996; Lowe and Oliver, 1991; Pfeffer, 1994) Factors affecting HRM Practices: HRM practices differ from one country to another and the factors which affect the HRM practices include external and internal factors. As quoted by Ozutku and Ozturkler (2009) external and internal factors affecting HR practices differs significantly across countries. Some of the major potential influences are as follows: External Factors:

Kane and Palmer (1995) opine that external factors affecting HR practices are those pressures on firms that cannot be controlled and changed in a favorable way in the short run. These factors include the following: Economic Changes: Satow & Wang (1994) found that as a result of development of the global economy, the international dimension of HR practices has become more and more significant . The focus of HR practices has shifted from traditional topics such as internal selection and rewards to concepts such as globalization and international competition.

Technological Changes: Technology affects HRM to a greater extent because of high degree of interaction between technology and HR. Technology changes the way we work, the roles we undertake and the interactions through which work gets done (DeFillippi, 2002). Verkinderen and Altman (2002) argued that technology facilitates the growth of a multinational enterprise but generates simultaneous problem of “unpluggedness” among a geographically dispersed workforce. Garavan et al. (2008) suggested that technology lies at the heart of manufacturing industry.

It provides a series of business advantages. Technological developments alter the context of HR practices and the way they are implemented. National Culture: Chandrakumara and Sparrow (2004) found that culture has crucial importance in organizations preferences in developing appropriate structure and methods for HR practices affectivity. Industry/Sector Characteristics: Organizations can be classified into manufacturing and service organizations for the purpose of analyzing the HRM practices.

The idea behind this classification is the fact that different production processes necessitates different HR practices. Legislations /Regulations: Legislations and regulations are frequently cited as having a direct impact on HR practices (Kane and Palmer, 1995). Every country has developed a set of regulations for the management of human resources, so, the HRM practices have to be designed or modified according to these regulations.

Actions of Competitors: There are many ways in which companies can gain a competitive edge or a lasting and sustained advantage over their competitors, among them being the development of comprehensive human resource practices (Jackson et al. , 1989; Kane and Palmer 1995; Poole and Jenkins, 1996; Narsimha, 2000). Globalization: As a result of globalization, the whole world has become a single market; the companies have crossed the boundaries of their country of origin and opened their operations in other countries.

This has created a challenge for the organization in terms of management of human resources, some companies have tried to transfer the HRM practices from one country to another but it has been found that some practices can be transferred across nations almost without any change but some must be modified to become workable in another setting and some are more deeply culture-specific and may not always be transferable. Internal Factors: The Internal environment of organizations strongly affects their HR practices.

According to (Milkovich and Boudreau, 1991) researchers have compiled a lengthy list of organizational characteristics related to HR practices. The important internal factors are as follows: Organizations Size: According to (McPherson,2008) evidence suggests that there is a large number of small firms that do not institute formal HR practices in large organizations , for each functional level there may a need for a different HR department (Jackson et al. ,1989; Kaynak et al. , 1998). Organizational Structure: A firm’s strategy and structure are important in determining HR practices flexibility and integration.

There are important structural differences among firms that affect the way in which HR practices are designed and implemented (Garwin, 1986; Tomer, 1995; Hudson et al. , 2001). Business Strategy: To gain competitive advantage, firms use different competitive strategies . These strategies are more productive when they are systematically liked with human resource management practices Companies can improve their environment by making efficient choices about human resource practices that consistently support their chosen strategy (Milkovich and Boudreau, 1991; Schuler, 1992).

Human Resource Strategy: HR strategy is an important determinant of both intensity and diversity of HR practices (Gravan et al. , 2008). As a rule HR practices are shaped in accordance with HR strategy. Line Management: Line Management participation in designing and implementing HR activities is the key to organizational success. Since line managers are responsible for creating value, they should integrate HR practices in their work (Okpara and Wynn, 2008; Alas et al. , 2008). Power and Politics: Milkovich (1987) found that organizational power and politics as exercised by various constituencies are crucial determinants of HR practices.

Academic and Professional influence on HR Practices: HR staffs are regularly involved in the declaration making process about HR policies and practices. Their acquaintance about alternative HR practices may symbolize vital variables in their own right (Kane and Palmer, 1995) Benefit of using Human resource policy to Internal and external Environment In similar vein, researchers (Budhwar and Sparrow 1997; 2002; Hope-Hailey et al. , 1997; Truss et al. , 1997; Sisson and Storey, 2000) have highlighted the benefits of devolvement of HRM to line managers.

These include: highlighting certain issues that are too complex for top management to comprehend alone; developing more motivated employees and more effective control; local managers responding more quickly to local problems and conditions; resolving most routine problems at the ‘grassroots level’; affording more time for personnel specialists to perform strategic functions; helping to systematically prescribe and monitor the styles of line managers; improving organisational effectiveness; preparing future managers by allowing them to practise decision-making skills; and assisting in reducing costs by redirecting traditionally central bureaucratic personnel functions. Despite he highlighted benefits of the devolution of HRM to the line management, it is still not widely practised in organisations. On the basis of earlier studies in the UK and their own in-depth investigations into the topic, McGovern et al. (1997: 14) suggest that devolution of responsibility for HRM to line managers is constrained by short-term pressures on businesses (such as minimising costs), the low educational and technical skill base of supervisors and a lack of training and competence among line managers and supervisors. An important issue for top decision-makers is how to evaluate the extent to which both strategic integration and devolvement are practised in their organisations.

The level of integration of HRM into the corporate strategy can be evaluated by a number of criteria: these include representation of specialist people managers on the board; the presence of a written people management strategy (in the form of mission statement, guideline or rolling plans, emphasising the importance and priorities of human resources in all parts of the business); consultation with people management specialists from the outset in the development of corporate strategy; translation of the people management strategy into a clear set of work programmes; the growing proactive nature of people management departments through the creation of rolling strategic plans (emphasising the importance of human resources in all parts of the business); through mission statements; by aligning HR policies with business needs through business planning processes; by use of participative management processes and committee meetings; and via HR audits. Support for the universalistic approach to strategic HRM is mixed as there are notable differences across studies as to what constitutes a ‘best HR practice’. Most studies (e. g.

Bamberger and Meshoulam, 2000; Christensen Hughes 2002; Boxall and Purcell 2003) focus on three mechanisms by which universal HR practices impact on business performance: (1) the ‘human capital base’ or collection of human resources (skills, knowledge, and potential), that the organization has to work with – the organization’s recruitment, selection, training and development processes directly affect the quality of this base; (2) ‘motivation’, which is affected by a variety of HR processes including recognition, reward, and work systems; and (3) ‘opportunity to contribute’, which is affected by job design, and involvement/ empowerment strategies. In addition, the best practices approach generally refers to the resource-based heory of firm and competitive advantage, which focuses on the role internal resources such as employees play in developing and maintaining a firm’s competitive capabilities (Wright et al. , 1994; Youndt et al. , 1996). For a resource to be a source of competitive advantage it must be rare, valuable, inimitable and non-substitutable. Therefore, HR practices of the organization can lead to competitive advantage through developing a unique and valuable human pool. HR Policies and Practices in British American Tobacco BD (Main Analysis) HRM policies and practices directly or indirectly influence numerous variables in any organization. The following relationships have been identified through conducting our research on British American Tobacco BD: HRM Practices and Competitive Advantage:

Implementation of strategic HRM practices helps British American Tobacco BD to attain competitive advantage. They believe competitive advantage can be developed and sustained by creating value in a way that is rare and difficult for competitors to emulate and the quality the human resource within is complicated to duplicate. HRM Practices and Employee- Employer Relationship: BAT ensures effective HRM practices to improve Employee-employer relations The HRM practices facilitate the organization to increase communal understanding between the employees and the employer. BAT considers HRM practices as a communication channel between employer and employees.

BAT appraise the impact of these practices on firm performance and employee relation climate and found that SHRM practices have direct and positive effects on financial performance, operational performance, and the employee relations climate. HRM Practices and Trust To uphold employee trust in the whole organization BAT maintains a sound functioning of HRM practices. Such practices can therefore be used in order to build the impersonal dimension of organizational trust. HRM Practices and Effective Utilization of Employees Employees often perform below their potential. British American Tobacco BD considers HRM practices as an influential factor on employee skills and motivation. They influence employee skills through the acquisition and development of their human capital.

Recruiting procedures and selection regimes have an influence over the quality and type of skills new employees possess in BAT. HRM Practices and Employee Commitment: BAT trust that implementation of HRM practices in the organization leads to enhanced employee commitment. That is why they maintain appropriate method of decentralization, compensation, training/development, positional tenure and career mobility for their employees. These factors have a significant effect in employee commitment. Age, organizational tenure, level of autonomy, working hours, social involvement and personal importance significantly affects the employees as well. HRM Practices and Organizational Performance: HRM practices enhance organizational performance.

BAT implemented more ‘progressive’ HRM practices and which reported a workplace climate that strongly valued employee participation, empowerment and accountability tended to be perceived to generally achieve better on a number of valued organizational outcomes. HRM Practices and Employees Productivity: HRM practices, such as working in teams, greater discretion and autonomy in the workplace and various employee involvement and pay schemes, do motivate workers in BAT and generate higher labor productivity. BAT influence cross functional teams, job rotation, quality circles and integration of functions to have positive labor productivity. HR department of BAT provide informal and formal training as well as their recruitment and selection have also shown to have an impact on productivity and market value.

HRM practices (training, selection, career planning, employee participation, job definition, compensation, performance appraisal) are correlated positively with the employee performance of BAT. HRM Practices and Job Satisfaction: HRM practices also affect the level of job satisfaction of the employees. There is a relationship between HRM practices and workers overall job satisfaction and their satisfaction with pay. BAT use HRM practices, that raise workers overall job satisfaction and their satisfaction with pay. HRM Practices and Employees Intention to Leave: Employee turnover is a major challenge for the organization but the companies implementing effective HRM practices can reduce the rate of the employee turnover. British American Tobacco evaluated six HR practices to reduce the overall turnover rate.

These are: realistic job information, job analysis, work life balance, career development, compensation and supervisor support These innovative HRM practices have resulted into building image of the company in the mind of the employees and it is very clear British American Tobacco Bangladesh is performing well in their sectors. Findings The review of various studies conducted on HRM practices shows that there are several factors inside and outside the organization that affect HRM practices and the HR mangers should carefully analyze these factors while designing the HRM practices. The following things should in particular be kept in mind according to the findings of our survey. 1. Due consideration should be given to link the HRM practices with the long term objectives and the strategies of the organization. 2.

The HRM practices should be evaluated from time to time by conducting a survey among the employees and the provisions should be made to incorporate changes from time to time. 3. The traditions of the organization and the past practices should be kept in mind while designing and implementing HRM practices. 4. The top management should provide fullest possible support (financial as well as moral) to the HR department in designing and implementing the HRM practices. 5. The HR managers should keep themselves up to date with state of art HRM practices. 6. The HRM practices differ from one country to another, so due consideration should be given to the organization and the country’s specific environment. Conclusion

The review of the research on HRM practices have shown that to manage the human resources effectively the organizations have to implement innovative HRM practices. Organization like BATB which implements such practices with dedication, remains ahead of their competitors because such practices affects other variables such as competitive advantage, job satisfaction, financial performance, employee turnover, service quality, employee commitment etc. in a positive manner and leads to overall corporate performance.. Adaptation of human resource policies and practices in organizational internal and external environment leads any organization to achieve competitive advantage in todays business arena.

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