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Human Resource Information System in SMEs:A Group project submitted to American International University-Bangladesh

Prepared and submitted by:

Md. Sakib Khan07-07642-1

A research paper Submitted to: Rana Dipankar Mazumder, Faculty and Instructor, American International University-Bangladesh, in partial fulfillment of the

requirements for HRIS Course.

Spring 2010Dhaka, Bangladesh

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ACKNOWLEDGEMENT

We would l i ke to express our grat i tude to the employees of Mutual Property L imited and Body & Sports . We would a l so l i ke to thank our course instructor Rana Dipankar Mazumder , Facu l ty of Amer ican Internat iona l Univers i ty – Bang ladesh for h is k ind, cont inuous gu idance and re lent less e f forts to make our Group Pro ject Report a worth one. We be l ieve that for h i s e f fort and gu idance we wi l l be ab le to prepare rea l HR informat ion system software in future .

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Table of Contents:

Title Page Human Resource Information System 4Small Medium Enterprise 5Mutual Property Limited 6Body & Sports 8Benefits of using Human Resource Information System 9HRIS in Bangladesh 10Final Thoughts 11Appendix-A:Interview/Questionnaire 12 Appendix-B: Bibliography 13

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Human Resource Information System (HRIS)

System: A system is defined as interrelated components with a clearly defined boundary working together to achieve a common set of objectives. A system have 5 components; input, processing, output, feedback and control.

Information system (IS): An information system depends on the resources of people, hardware, software, data and network to perform input, processing, output, storage and control activities that convert data resources into information products.

HRIS: Human resource information systems provide the manager with data to support routine and repetitive human resource decisions.

Benefits of HRIS: To make a human resource department more effective and efficient new technologies are now being introduced on a regular basis so make things much simpler and more modernized. One of the latest human resource technologies is the introduction of a Human Resources Information System (HRIS); this integrated system is designed to help provide information used in HR decision making such as administration, payroll, recruiting, training, and performance analysis.

Human Resource Information System (HRIS) merges human resource management with information technology to not only simplify the decision making process, but also aid in complex negotiations that fall under the human resource umbrella. The basic advantage of a Human Resource Information System (HRIS) is to not only computerize employee records and databases but to maintain an up to date account of the decisions that have been made or that need to be made as part of a human resource management plan.

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Small Medium Enterprise (SME)

Definition of an Enterprise: According to web dictionary, an enterprise is a purposeful or industrious undertaking that requires (effort or boldness): “he had doubts about the whole enterprise”.

Definition for SME: The lack of universal definition for Small Medium enterprise (SME) is a barrier for proper market research and trend analysis on SMEs. The definition of SME actually varies from country to country. The Governments give the SME definition due consideration for political and economic situations. Definitions for SMEs today define thresholds in terms of employment, turnover and assets.

In Germany SME is defined as an organization which employees less than 250 people. Whereas in Belgium the SMEs are those firms which employ less than 100 employees. However, today EU maintains a solid definition for SMEs. It says that a Micro enterprise should not have more than 10 employees, if it has more than 10 but less than 50 employees, it is a Small enterprise and if the firm has greater than 50 and less than 250 employees than it is listed as a Medium enterprise. U.S definition for SME is for those organizations which employee less than 500 employees.

As per Bangladesh Bank’s Circular No: ACSPD-08, Dated 26-05-08, the definition for SMEs are as follows:

Small Enterprise (Non Public Limited Company)

Service Concern Trading Concern Manufacturing Concern

Total Assets (excluding land and building)

TK. 50,000 to Tk. 5 Crore

Tk. 50,000 to Tk. 5 Crore

Tk. 50,000 to Tk. 1.5 Crore

Number of Employees

Less than 25 Less than 25 Less than 50

Medium Enterprise (Non Public Limited Company)

Service Concern Trading Concern Manufacturing Concern

Total Assets (excluding land and building)

TK. 5 Crore to Tk. 10 Crore

Tk. 5 Crore to Tk. 10 Crore

Tk. 1.5 Crore to Tk. 20 Crore

Number of Employees

Less than 50 Less than 50 Less than 150

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Success rate of SMEs: In EU SMEs accounts for a total of 99% of businesses and employs nearly 65 million people. In India, 39% of Micro and Small Enterprises (MSE) are in manufacturing sectors. These (MSEs) accounts for 33% of India’s total exports. In South Africa Small, Medium, Micro Enterprises (SMME) is the building blocks of their economy. Worldwide the SMEs are composed of 99% of business and contribute 40% to 50% of annual GDP.

SMEs in Bangladesh: The latest BSCIC estimates suggest that there are currently 55,916 small industries and 511,612 cottage industries excluding handlooms. Quoting informal Planning Commission estimates, the SMDF puts the number of medium enterprises (undefined) to be around 20,000 and that of SCIs to be between 100,000 to 150,000. The SMEs are undoubtedly quite predominant in the industrial structure of Bangladesh comprising over 90% of all industrial units (Ahmed, M.U 2001). Together, the various categories of SMEs are reported to contribute between 80 to 85 per cent of industrial employment and 23 per cent of total civilian employment (SEDF, 2003).

Mutual Property Limited

Type of Business: Real Estate DeveloperMode of Enterprise: Medium Number of employees: 18Organization culture: Power center cultureInformation System: Both computer and typed documents are used to record informationInterviewee: Mohd. Aminul Islam (Managing Director)E-mail: mutualpl@yahoo.com

Company Profile: Mutual Property Limited (MPL) is a renowned real estate company in Bangladesh which established in 2006. MPL is developing luxury apartment complexes in the prime locations of the Dhaka City and it has a mission to build a peaceful living home with the changes in tastes and need of modern life style. Its vision is to play a vital role to help the housing problem as well as improving the quality of life of the people of Bangladesh. Mutual Property Ltd always thinks better for their buyer as ensuring fruitful life for the next generation.

Selection & Staffing: Information regarding the openings of job vacancy, future job requirements and specific criteria for candidates to fill up those positions are collected and recorded by the administration department. Every year a report is submitted to the managing Director for verifications for the purpose of researching the financial costs and other factors associated with recruiting new staffs. The final decision made by the Managing Director who orders the Deputy Managing Director (DMD) to fill up those positions. The job of Deputy Managing Director is to prepare job description and job specification and submit the job advertisements for recruiting. The most attractive media for this firm is the news papers. The

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(DMD) interviews the job candidates and select those people who best fit in the business. Usually people who show long term commitment in the firm are hired.

Performance Appraisal: The Company focuses on two criteria for measuring performance; attendance and task accomplishments. The attendance sheet is kept by the administration department, which records each of the staff’s attendance. The task sheet contains the list of tasks performed by each staffs per month. Each employee is responsible for recording their own tasks and reporting to their respected superiors. Each month the attendance sheet and task sheet are then submitted to the Managing Director. The M.D then reviews the reports and takes necessary actions.

Training and Development: MPL doesn’t invest in any formal training to their employees. However, they use on the job training such as mentorship and orientation. The reason for not investing in training is because it’s very risky. If a small firm like MPL creates talents, they will quickly become an attraction for large developer firms. Therefore in order to retain those people, MPL will have to offer them competitive pay structures. But MPL cannot financially afford to compete with large developers. Therefore training is not a high priority for a small firm in Bangladesh.

Compensations: The finance department collects information and prepares an employee sheet and submits to the M.D at the end of every month. The salary sheet contains information regarding the pay structures. After the review, the M.D recommends his approval. Decisions such as allocation of bonuses, salary cuts for punishment or pay increase are taken by the M.D.

Strategic HR: Promoting the best people who fit in the organization environment. Empowering engineers to use creativity for creating the best architect designs to match

competitors. (At present MPL creates one of the best interior design whereas the Dominous Property Ltd. Heads in the best exterior designs for apartments)

Utilizing the staffs for reducing the cost and increasing the quality of the project

Recommendation: MPL should start using HR, payroll and attendance software to become more effective

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Body & Sports

Type of Business: Sports goods retailerMode of Enterprise: Small Number of employees: 8Organization culture: Power CenterInformation System: Written documents are used to record informationInterviewee: Mr. Farhad, Shop Manager in Banani

Company Profile: Body & Sports is a renowned seller of high quality sports goods and physical exercise equipment in Bangladesh. It has started operation in 2002 and at present it has two shops; in Panthapath and Banani. The culture of Body & Sports is devoted for providing top quality after sales services as well as tracking up to date information for spots goods and gym equipment. The manager points out that their shop is at the top list of customer’s preference because of these unique qualities. They serve their customers to make sure that they keep coming. The mangers have high interpersonal skills, which also helps them to create relationships with the clients. The shop is expected to advance more and has plans to go to other major cities in Bangladesh.

Selection & Staffing: Each shop is directed by individual shop managers. Whenever the organization requires a staff, shop manager contacts the owner for approval. The shop managers have the formal power for interviewing and recruiting staffs. However the recruitment for managers is conducted by the owner. Any business graduates are encouraged to apply for the managerial position.

Performance Appraisal: Performance appraisal for managers are conducted on the basis of sales. If the shop has higher sales and high customer satisfaction, then the manager is viewed as efficient.

Training and Development: No training provided to managers and staffs.

Compensations: The shop manager prepares a staff list and submits it to the owner. After the review, the owner then allocates salaries to each staffs by cash. The managers and staffs are handsomely paid. However even though their salaries are not linked to their performances, the employees are still motivated.

Strategic HR: Motivated staffs provide better service to customers Interpersonal skills of managers and staffs builds customer relations

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Recommendation: Body & Sports should create an intranet system for employee records and performance

based pay system within the organization Mangers pay should be linked with the shops sales level and staffs should be given

commission

Benefits of HRIS

Performance Management:

Employee can select different rates every time the feedback is collected.

Additional rates for an employee can be added by HR.

Confidentiality can be provided for any information.

Helps an employee to understand his “Self - Development Needs” based on how others view him.

Pay for performance is used by many leading companies as a performance driver. Calculation and compilation of this component of remuneration (often called PLB) is a time consuming and complex task that requires colossal effort by the HR. Performance Linked Bonus module automates the management process based on the allocated budgets.

Selection & Staffing:Software Recruitment Portal provides a powerful approach to select the best fit talent for a company and also helps complete on-boarding formalities. HR department employees spend significant time in managing employee requests which are typically paper based. This is an extremely expensive, error prone, time consuming and repetitive mode of personnel administration. Automation results in savings in time, effort and a qualitative improvement in the HR services. The end result is speedy decision making, enhanced employee satisfaction and significant savings.

Compensation:

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Allows the administrator to start an increment cycle synchronized throughout the company.

Involves line managers in helping decide increments for their employees. Allows setup of rules by the HR (compensation planners) to define the increment bands,

bonus criteria etc. Encourages real time feedback to managers and a collaborative framework to allow full

participation of both managers and HR to take decisions about the increments. Generates annual increment award letters for the employees.

HRIS in Bangladesh

The perception of Human Resource Management is very narrow in Bangladesh. However as the MNCs has started the first standardization for HR Department, the concept of HRM has since gained popularity in Bangladesh. Today it is hard to find a large company which doesn’t have an HR department. However the practices in these departments are traditional personnel management. Only few MNCs such as American Express, BAT and Nokia Siemens value the HR department and consider it as a Strategic partner. The introduction of HRIS in Bangladesh is having a revolutionary impact. Extracting HR related information which was a very lengthy process is now at a finger tips. Employers are therefore seeing it as a competitive advantage for using HRIS.

Evolution of HRIS in Bangladesh

(Sayeda Zakeerin, Bakht Nasir)

Final Thoughts

MISSpecialist Strategic Partner

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HRM is still neglected in most companies in Bangladesh but HRIS will change this perception in future. British American Tobacco and American Express was the first to use an integrated HR Information system and other local firms are adopting this approach a demo effect. The benefits of HRIS are very huge for a business and establishing this system can also be done by cheaper MS Excel. However, many managers are not realizing this potentiality. The complete automation of HR process has already started in public companies and in few SMEs. As the time progresses, tomorrows HRIS will not be optional as it is today, it will be a necessity.

Appendix-A

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Interview/Questionnaire

For Managers:

Q-1: Give us a brief introduction of your company?Q-2: What is your staffing strategy?Q-3: Who is responsible for collecting and reporting information for job vacancy? Q-4: Do you keep records for job descriptions?Q-5: How do you make sure that HR information is readily available during decisions?Q-6: Who does performance appraisal?Q-7: Do you keep the records of performance appraisal for the purpose of using it in future?Q-8: Do you use performance appraisal for determining employee compensation and training needs?Q-9: What types of training do your organization provides?Q-10: How do you record employee salary information?Q-11: What is your compensation strategy?Q-12: Who are your competitors?Q-13: How do you use your HR to differentiate your firm from the competitors?

Appendix-B

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Bibliography:

I. Islam, Mohd. Aminul: Managing Director, Mutual Property Ltd. Interviewed on 5 February 2010

II. Hossain, Farhad: Shop manager, Body & sports. Interviewed on 9 February 2010III. Zakeerin, Sayeda. Bakht: HR Manager, Nokia Siemens. Seminar conducted on 11

February 2010IV. March 4, 2007. Small Medium Enterprises. Retrieved in February 5, 2010 from

http://en.wikipedia.org/wiki/Small_and_medium_enterprisesV. November 1, 2008. Criteria for SMEs in Bangladesh. Retrieved in February 5,

2010 form http://www.agranibank.org/html/SME.pdf

VI. The Small Medium Enterprises in Bangladesh: An Overview. Collected from State University journal by Dr. Momtaz Ahmed

VII. George M. Marakas (2006). Management Information System. New York: McGraw-Hill Irwin

VIII. Fred R. David (2009). Strategic Management: Concepts and Cases. New Delhi: PHI Learning