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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 Khan

07-07642-1

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 2010
Dhaka, Bangladesh

ACKNOWLEDGEMENT
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We would like to express our gratitude to the

employees of Mutual Property Limited and Body &
Sports. We would also like to thank our course
instructor Rana Dipankar Mazumder, Faculty of
A m e r i c a n I n t er n a t i o n a l U n i v e r s i t y – B a n g l a d e s h f o r h i s
kind, continuous guidance and relentless efforts to
make our Group Project Report a worth one. We
believe that for his effort and guidance we will be able
t o p r e p a r e r ea l H R i n f o r m a t i o n s y s t e m s o f t w a r e i n
f u t u r e.
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Table of Contents:

Title
Page
Human Resource Information System
4
Small Medium Enterprise
5
Mutual Property Limited
6
Body & Sports
8
Benefits of using Human Resource Information System
9
HRIS in Bangladesh
10
Final Thoughts
11
Appendix-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 TK. 50,000 to Tk. 50,000 to Tk. 50,000 to
(excluding land Tk. 5 Crore Tk. 5 Crore Tk. 1.5 Crore
and building)
Number of Less than 25 Less than 25 Less than 50
Employees
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Medium Enterprise (Non Public Limited Company)

Service Concern Trading Concern Manufacturing

Concern
Total Assets TK. 5 Crore to Tk. 5 Crore to Tk. 1.5 Crore to
(excluding land Tk. 10 Crore Tk. 10 Crore Tk. 20 Crore
and building)
Number of Less than 50 Less than 50 Less than 150
Employees

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 Developer

Mode of Enterprise: Medium
Number of employees: 18
Organization culture: Power center culture
Information System: Both computer and typed documents are used to record
information
Interviewee: 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
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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
(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:
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• 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

Body & Sports

Type of Business: Sports goods retailer

Mode of Enterprise: Small
Number of employees: 8
Organization culture: Power Center
Information System: Written documents are used to record information
Interviewee: 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
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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

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.
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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:

➔ 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
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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

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.
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Appendix-A

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?
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Appendix-B

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 2010
III. Zakeerin, Sayeda. Bakht: HR Manager, Nokia Siemens. Seminar
conducted on 11 February 2010
IV. March 4, 2007. Small Medium Enterprises. Retrieved in February
5, 2010 from
http://en.wikipedia.org/wiki/Small_and_medium_enterprises
V. 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
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