The Impact of Hrm (Human Resource Management) on Organizational Performance, Effectiveness & Efficiency: a Triumph or Mousetrap for the Rmg (Ready Made Garment) Industries of Bangladesh.

Topics: Economy of Bangladesh, Human resource management, Economics Pages: 15 (5034 words) Published: July 20, 2011
Introduction to the Topic

1.1 Background of the research
RMG (Ready Made Garment) Industry is one of the vibrant economic engines of Bangladesh. More than three quarters of Bangladesh’s export earning comes from the garment industry. The industry started its journey back in 1978 with 9 enterprises and currently, there are 4490 manufacturing units. The industry now employs more than 3 million workers and 90% of whom are women & about 70% of them are from rural areas. With the industrial revolution of RMG sector, Bangladesh has given its women an image of high boost in the whole of South Asia as well as to the rest of the world.

The RMG sector individually contributes around 78 percent to the total exports of Bangladesh by FY 2009-2010. Amazingly, the total earnings from clothing exports were US $ 12.6 billion in the FY 2009-2010 which was just US $9.35 billion back in 2007. Moreover, RMG export sector also contributes around 13 percent to the GDP and the total export was 17 percent to the GDP as per FY 2009-2010, which was only around 4 percent in 1991-92 of GDP and total export was 6 percent of GDP. (Bangladesh Bank, January 2011). Currently, being a 100 percent an export-oriented industry, it exports 35 types of garment products to about 31 countries around the globe (Nuruzzaman 1999:2). USA is the largest importer of Bangladeshi RMG products, followed by Germany, UK, France and other E.U countries. In the last decade of the twentieth century, this RMG sector of Bangladesh maintained its position as the 6th largest exporter of apparel to the United States between 1994-97 (Quddus and Rashid 2000:53). Bangladesh also ranks as the 1st export of T-shirt to the Europe (BGMEA, 1997-1998).

In order to control the level of imported RMG products from developing countries into developed countries, Multi Fiber Agreement (MFA) which is also known as the Agreement on Textile and Clothing (ATC) was made in 1974. At the General Agreement on Tariffs and Trade (GATT) Uruguay Round, it was decided to bring the textile trade under the jurisdiction of the World Trade Organization (Wikipedia). The MFA agreement imposed an export rate 6 percent increase every year from a developing country to a developed country. It also allowed developed countries to impose quotas on countries that exported at a higher rate than the bilateral agreements. In the face of such restrictions, producers started searching for countries that were outside the umbrella of quotas and had cheap labor.

This is when Bangladesh started receiving investment in the RMG sector. So, it means this agreement was not negative for all developing counties because these quotas are mainly bilateral and the extent of their restrictiveness varies country to country. As Bangladesh depends heavily on the exports of textiles and clothing, or ready-made garments was expected to suffer most from the ending of MFA as it was expected to face more challenges and competition from China. After the quota phased out on 1 January 2005, the roller coaster started rolling differently as Bangladesh’s labor is cheaper than anywhere else in the world. So, even after the MFA expired, orders still keep coming and Bangladesh's exports increased in value by about $500 million in 2006 (Wikipedia). However, poorer countries for example Greece and Portugal within the developed world are expected to lose out.

In the age of knowledge economy, Human resource management (HRM) practices play a pivotal role to gain profitability and market share that ultimately enhance the organizational performance in long run (Qureshi, 2006). HRM refers to the policies and practices including human resource planning, job analysis, recruitment, selection, orientation, compensation, performance appraisal, training & development and labor relations (Dessler 20007). The purpose of HRM is to improve productive contributions of employees and provide competitive advantage to the organization (Werther & Davis 1996). We...
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