Human Resource Development Programmes in the Financial Intermediaries: A Study of Two Selected Islamic Banks in Bangladesh

Abstract

Commercial Banks in Bangladesh play a vital role in the economic development of Bangladesh. Islamic banks also play important role in this regard. Now a day’s there is growing importance of human resources' management (HRM) in any organization. The banking performance had taken a bad shape due to default culture and non-performing loans. Islamic banks undertook different programmes for raising their HRM development activities through establishing separate training institutions and involving a good team of professional bankers, economic experts and others in their training and development activities. This has broadened the areas of success of these banks through prudent participation of the available human resources in the decision making process. The detailed review of different research studies shows that many of the studies have presented the operational performance of the Islamic Banks, their growth and development, role in entrepreneurship development, etc. But, not a single comparative study has yet been done on the effectiveness of Human Resources' Development activities on the performance of the Islamic Banks in Bangladesh. This study would be helpful for our policy makers and decision makers in the banking arena of Bangladesh in understanding the importance of growth and development of human resources, their productivity and operational efficiency. The main objectives of the study are: to assess the financial performance of the two purposively selected Islamic Banks (one is performing and the other is not performing well) and evaluate the impact of the growth and development of their human resources on such performance along with their major SWOT mix. The basic hypothesis of the study is that there is a positive correlation between managerial performance of the banks and development of the Human Resources, variations of the performance between the two banks are also statistically significant. The methodology used here is mainly documentary analysis or content analyses. The study also reveals that both primary and secondary data were used here. The researcher had series of discussions with some officials of both the banks and with some of their clients. The statistical tools used were Mean Values, SD, DV, Multiple Correlation and Regressions, ANOVA Test etc. Time span of the study covers the period from 1983 to 2004. The major findings of the study show that both the banks have systems for developing their human resources through their central training institutes in Dhaka; financial performance of the two banks in terms of profitability, productivity, cost of fund are more or less satisfactory. HRM development activities appear to be satisfactory since cooperation of human resources progressed due to motivation and collaborative approaches. Opinions of the employees reveal that training and development activities, performance appraisal system, scope for career planning, provisions for rewards, welfare and quality of work life, organizational development, management relation etc. are more or less satisfactory. There is involvement of employees in developing skills and knowledge. Motivation of the employees is also increasing their productivity. Absenteeism factors are negligible and there is good participation of employees in banking decisions. The training institutes were given enough scope for training the employees of the banks. There is also a good package of pay structure and other benefits for the employees. These have developed human resources of the banks. The major strength of the banks is their manpower; opportunity is that there is good demand for their investible funds. The major threat is that sometimes there is the problem of default culture. This enhances the cost of fund, decreases the productivity and profitable uses of funds. Both the banks are highly cost conscious and they perform greater social responsibility through introducing consumers' credit facility and other entrepreneurial financing schemes, old age financing schemes, education loan and financing of the rural poor. However, it is found that there is difference in performance of the two banks. In spite of such differences, it is concluded that HAD activities of both the banks are more or less satisfactory. There is congenial banking environment leading to productive utilization of the banks' funds which are increasing the value additions to the economy. Bank authorities need to be more vigilant on default culture and cost of funds. It is expected that with the use of the provisions of LRA model, the banks will be able to contribute more to the development of their human resources. This will raise the employee morale, motivation, job satisfaction and employees' productivity so that the managerial performance can easily be enhanced. This will also add to the value additions to the economy raising the growth and development activities of the banks with the expansion of information technology. There will be wide participation in on line banking to serve the economy. The Banks should try to increase the effectiveness of Human Resource Management activities through providing more training, motivation, counselling to the employees and this will increase their productivity and managerial performance. Unless the employees are self motivated to work more, their productivity, growth and development of the banks would remain poor. So, efforts should be made to increase productivity of the employees through better HRD management.