A Comparative Study of HRM Practices Between Foreign and Local Garment Companies in Bangladesh

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A Comparative Study of HRM

Practices between Foreign and Local
Garment Companies in Bangladesh
Article June 2014
DOI: 10.1177/2322093714526660
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Khasro Miah
North South University
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Article
A Comparative
Study of HRM Practices
between Foreign
and Local Garment
Companies in Bangladesh
South Asian Journal of Human

Resources Management
1(1) 6789
2014 SAGE Publications India
Private Limited
SAGE Publications
Los Angeles, London,
New Delhi, Singapore,
Washington DC
DOI: 10.1177/2322093714526660
http://hrm.sagepub.com
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Md. Khasro Miah

Muhammed Siddique Hossain
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Abstract
The purpose of this research is to explore and compare human resource management (HRM) practices between foreign and local garment companies operating in Bangladesh. This study surveyed 30 human resource, administrative and
factory managers of different levels of three garment companies: one US subsidiary, one UK subsidiary and one Bangladesh company. Results show that a blend
of HRM practices has been adopted by the foreign companies, ranging between
imitating home country practices and host country practices. Results also found
that foreign garment companies focus more on home country HRM practices,
especially in the area of selection and recruitment, training and development,
performance appraisal process and top management appointments. Foreign
garment companies are widely adopting host country HRM practices in industrial relations and compensational benefit. However, Bangladeshi local garment
company is following traditional HRM practices and showing interest in learning
from the foreign company HRM practices. Since this study is based on a limited
number of companies, generalization of findings of this study for cross-cultural
adaptation/adjustment in other developing countries should be made with caution. Combination of home and host country HRM practices can have a positive
influence on transfer of HRM practices in developing nations. It could open a
new avenue for further potential research on HRM practices in the South Asian
business context, especially in the garment industry.
Keywords
HRM practices, Bangladesh, US, UK, garment industry
Md. Khasro Miah, Professor, School of Business, North South University, Dhaka,
Bangladesh. E-mails: khasro@northsouth.edu; ksmnsu@gmail.com
Muhammed Siddique Hossain, Senior Lecturer, School of Business, North South
University, Dhaka, Bangladesh. E-mails: s.hossain@northsouth.edu; s.hossain355@gmail.com
68
Md. Khasro Miah and Muhammed Siddique Hossain
Introduction
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In recent years, many research studies have been conducted on human resource
management (HRM) practices in host countries through the subsidiaries of multinational companies (MNCs) (Farley, Hoenig & Yang, 2004; Ferner, 1997; Gamble,
2003). The main drawback of the existing research is the restricted focus on
Western MNCs (Almond, Edwards & Clark, 2003; Edwards & Ferner, 2004;
Farley, Hoenig & Yang, 2004; Ferner & Quintanilla, 1998; Ferner & Varul, 1999;
Guest & Hoque, 1996; Innes & Morris, 1995; Muller, 1998; Tayeb, 1998). A limited number of studies have been conducted on this issue in the context of developing countries (Miah & Bird, 2007; Miah & Wali, 2012).
The spread of MNCs in developing countries and their ability to break through
cross-border constraints in exercising home country HRM practices has been an
issue in research. The rapid progress of the South Asian countries, especially
Bangladesh, has attracted foreign investment, which demands efficient HRM practices. Previous studies revealed that cross-cultural research is continuing to be written from either an American or European point of view, rather than from an
international perspective (Adler & Ghadar, 1991; Brewster & Scullion, 1997).
A number of scholars have identified a need for more research on HRM practices
in South Asia due to the limited number of comparative HRM studies between
developing and developed countries (Budhwar & Sparrow, 2001; Miah & Kitamura,
2005; Miah, Wakabayashi & Takeuchi, 2003). One primary issue in the literature is
to what extent MNCs and their subsidiaries practices resemble the parent company
and host country practices. Several authors have acknowledged that HRM represents a major restriction when MNCs are trying to implement global strategies in
the different cultural and institutional framework of each affiliate where the MNCs
operate (Edwards, 2004; Myloni, Harzing & Mirza, 2003).
When adopting HRM strategies and practices, MNCs have identified dual pressures of home and host country institutional atmosphereboth push and pull force
(Farley et al., 2004; Hillman & Wan, 2005; Rosenzweig & Nohria, 1994; Taylor,
Beechler & Napier, 1996). These dual pressures have an effect on HRM practices of
MNCs at subsidiary level in the South Asian countries. Earlier comparative researches
on HRM in South Asia have identified the significance of firms national origin and
culture (Awasthi, Chow & Wu, 2001; Bae, Shyh-jer & Lawler, 1998; Chow, Harrison,
McKinnon & Wu, 2000; Chow, Shields & Wu, 1999; Hofstede, 1993; Huang, 2000;
Miah & Bird, 2007). These studies also addressed how cultural and institutional differences affect the sharing of HRM strategies and practices by MNCs.
There is a close association between organizational structures and decentralization of employment relations. A considerable variation of MNCs involvement on
different dimensions of HRM practices is observed (Hamill, 1992). Japanese MNCs
have greater control over HRM practices in their subsidiaries (Beechler & Yang,
1994; Dedousis, 1994; Pudelko & Harzing, 2008). Some MNCs are controlling their
HRM structures globally taking into account the host countries policies and practices, as some researchers found a blend of HRM practices in MNCs subsidiaries
South Asian Journal of Human Resources Management, 1, 1 (2014): 6789
HRM Practices between Foreign and Local Garment Companies
69
(Hannon, Huang & Jaw, 1995; Taylor & Bechler, 1993). Rarely an MNC is found to
completely follow home country HRM practices. The headquarters influences
depend on the employment regulation in the host country and the role of individual
subsidiaries (Harzing, 2004; Myloni, 2002; Rosenzweig & Nohira, 1994).
Home and Host Country Effect on HRM Practices
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Western MNCs often tend to transfer their parent companys HRM practices in
order to control their local subsidiaries through parent country expatriates. The
parent company influences and the standardization of different HRM activities
depends on the headquarters approach to the subsidiarys HRM practices as well
as on the scope of the employees mobility across different subsidiaries (Mahmood,
2004). The country of origin effect on an MNCs HRM practices has begun to
receive renewed attention by several researchers and has given birth to an interesting debate between home country versus host country effect (Glover & Wilkinson,
2007; Guest & Hoque, 1996; Innes & Morris, 1995; Roche & Geary, 1996;
Rosenzweig & Nohria, 1994). A central question is whether the HRM of foreign
subsidiaries is determined by the foreignness of the invested capital (country of
origin) or by locally prevalent customs and practices (Roche & Geary, 1996). The
foreign expatriates tend to adopt culturally distinctive HRM practices to obtain
employee loyalty and commitment to their company. The home country strategy
is to reward performance instead of seniority as the pay structure is often totally
aligned with performance (Nazir, Shah & Zaman, 2012).
MNCs have three strategic choices: ethnocentric, polycentric and geocentric
(Heenan & Perlmutter, 1979; Koh, Gammoh & Okoroafo, 2014; Perlmutter, 1969).
However, when it comes to transferring HRM practices abroad, other factors, such
as the host country environment, may limit the MNCs freedom to choose among
the above strategies, etc., and therefore require careful consideration. MNCs are
opting for the strategy that fits best with each subsidiarys local conditions (Tayeb,
1998). Thus, a company having subsidiaries in foreign countries may adopt an
ethnocentric strategy for some and a polycentric or even a global one for others.
Furthermore, as many authors have argued, such a typology treats management
practices in terms of an overall orientation, which may overlook MNCs internal
differences (Rosenzweig & Nohria, 1994). Some companies are more responsive
to pressures of local adaptation, and some are more prone to internal consistency.
Likewise, some management practices of the parent company are closely followed,
while others are similar to those of the host country in the same subsidiary.
Rationale of the Study

Bangladesh Manufacturing and Exports Association (BGMEA) is a government
sponsored trade organization for export-oriented and fashion-related products
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manufactured in Bangladesh. With only 3 per cent contribution to the GDP of

Bangladesh in 1991, the industry is contributing 13 per cent to the GDP of
Bangladesh in 2012. Moreover, the industry accounts for 78 per cent of countrys
export earnings and 80 per cent of its workers are female. In the meantime,
Bangladesh has become the second largest apparel exporting country in the world
(Haque, 2013). During the fiscal year 20102011, the garment industry export
totalled $17.91 billion, a 43 per cent increase over the previous year (BGMEA,
2012). The growth potential of this industry is immense. Therefore, HRM becomes
a major concern for the industry and the nation as well. This study is taking a
snapshot of HRM practices of local and foreign garment companies and trying to
identify how the local and foreign companies are adopting to the different dimensions of HRM practices in the environment of operating garment companies.
This study explored HRM practices between foreign and local garment companies operating in Bangladesh. This research is important for two reasons; (i) more
foreign companies from developed economies are entering into South Asia and
transferring their HRM practices and (ii) it is critical to expand the current findings of what the researchers actually know about the impact of host country and
home country effect on HRM practices in Bangladesh.
Background Information of the Garment Companies

Selected for this Study
Case One (UK-based Garment Company)
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This UK-based garment company manufactures high quality ready-made garments at competitive prices for some of the world famous retailers. Total asset
value of the company is around $5,099.4 million. The crucial factors behind its
success are its innovative services in product development, fabric sourcing, technical support and teamwork. This company offers quality products at reasonable
prices and meets high standards and it has indeed one of the highest compliance
ratings in comparison to many Bangladeshi companies. It was incorporated in
Dhaka Export Processing Zone (DEPZ) in 1997.
This company is renowned for a vibrant and dynamic management team. The
key strengths of this company are said to be constant monitoring of industry
standards, technical know-how and technology and standard quality control system. The company operates within the international retail ethics policy. The company is now in a position to show versatility and to meet deadlines under rigid
conformity requirements.
Case Two (US-based Garment Company)

The innovative identification and decorative solutions for businesses and consumers worldwide made this company a leader in the trade. Total asset value of
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the company is around $3,056.7 million. It has manufacturing and distribution

facilities in more than 60 countries around the world. The office of this company
is located in DEPZ, Bangladesh. It is controlled by four components of businesses: pressure-sensitive materials, retail information services, office and consumer products and other specialty converting businesses. For the past 23 years,
this company has implemented excellent employee awards programme and has
recognized more than 900 employees for exemplary fulfilment of the companys
strategic priorities of growth, productivity, people, values and ethics. This company professes to be an equal opportunity employer.
Case Three (Bangladesh-based Garment Company)
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Methodology
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This company was established in 2004. It has been successfully maintaining

standards and exporting ready-made garments since then. With 80,000 pieces per
month production capacity, fabrics used are numerous, including solid and yarn
dyed cotton, CVC (cotton based fabric), TC (ten torn and cotton fabric), poplin,
polyester, twill and dobby sourced from local and regional suppliers. Total asset
value of the company is around $350 million. The buyers are said to be satisfied
with the performed norms and practices of the company. Business and sales
growth are modest. This garment company has placed a great emphasis on satisfying the buyers requirements and has managed to build an award-winning business on this philosophy.
Sampling and Data Collection
For this research, one Bangladeshi garment company, one US-based and one
UK-based garment company operating in Bangladesh were selected. Table 1 provides background information of these three companies. The comparative
research on Ready Made Garment (RMG) industry in HRM area is very limited.
A judgement sampling was used in order to collect in-depth information to
achieve the objective of the study. A questionnaire, consisting of different dimensions of HRM practices was developed to collect the data from the selected companies. Some of the dimensions included in the questionnaire are: recruitment,
training and development, promotion policy, performance appraisal, compensation, etc. An official appointment with the HRM managers was scheduled; the
questionnaire was handed in to the interviewees ahead of time; and face to face
interviews with the interviewees were completed afterwards. From a selected
pool of (10 3) 30 managershuman resource, administrative and factory
from the respective companies, data were collected with the structured questionnaire from all 30 respondents and then, face to face semi-structured interviews
were conducted.
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Table 1. Background Information of Local and Foreign Companies

Firms country of origin
Host country location
Bangladesh
UK
US
Dhaka
Dhaka
Dhaka
Yarn dyed cotton, CVC Ready-to-wear

(cotton based fabric), garments
TC (ten torn and
cotton fabric), poplin
and polyester
Main product
Country of origin
Bangladesh
Apparel
Solutions
UK
US
Establishment year
2004
1997
1988
Number of employees
1,500
2,000
1,800
61%
82%
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Total asset (US $ in millions)
350
5,099.4
3,056.7
% Sale in domestic market
55%
Nil
Nil
% of overseas market US $
in millions)
$100
$5,400
$6,500
10
10
10
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14,000
23,000
22,000
45/year
12 days/year
12 days/year
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Number of strike days

Sales growth
35
Master degree
Average monthly salary

(in Bangladeshi Taka)
Business growth
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Master degree
Average education
Medium
High
High
Moderate
High
High
Moderate
Very low
Low
Employee turnover rate
Master degree
Average age
Interviewed manager
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Only local employees
No of foreign expertise
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% Foreign capital
Some researchers have contended that quantitative research methods may

hold merit with respect to deducting real-time information on different HRM
practices of foreign subsidiaries (Martin & Beaumont, 1999). However, for the
purpose of understanding and comprehending the development process and the
dynamic nature of HRM practices, retrospective historical and longitudinal information have its characteristic of quantitative methods that will prove to be of
little help.
This may be attributed to the limited capacity of quantitative approaches to
take into account the overall context. Therefore, in regard to foreign garment
companies, especially for HRM practices in garment company environment,
which involves a variety of actors and consequently various contextual factors, a
more appropriate approach seems to be a qualitative one. In order to properly
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contrast the findings, equivalence of research methods and research administration at the data collection stage was taken into consideration.
To take into an account the process dynamics of the gradual evolution with
distributed questionnaire, retrospective and real-time data in the interview meeting were collected. With the proper permission and consent of the respondents, all
interviews were tape-recorded on-site and notes on the discussion were taken.
Then, recorded conversation was transcribed and translated, when needed, from
Bengali to English. Thereafter, all interview transcripts were shown to the interviewees for verification. The data were categorized in different groups related to
HRM transferability issues.
After collecting information from all the interviews and structured questionnaire, the narratives were reviewed, compared and then contrasted with the facts
of these three cases. A general explanation of the cause and effect relationship was
developed for all HRM practices. The relevant information is then used to rearrange the evidence into categories between foreign and local garment companies
and to explain the occurrence of HRM phenomena or causal relationships among
the transferability of HRM practices in Bangladesh (Piekkari, Nell & Ghauri,
2010; Mahmud, n.d.). A number of summary tables are prepared to demonstrate
the similarities and differences of HRM practices between foreign and local garment companies in Bangladesh.
Results
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Recruitment and Selection
Table 2 shows the hiring and selection approaches of foreign and local garment
companies. Results indicate that the Bangladeshi garment company uses less
standardized selection methods. It prefers internal recruitment, makes more use of
references, base their selection on less objective criteria compared to foreign companies. However, curriculum vitae and interviews play an important role in
employee selection in the local garment company. The interviews with local HR
manager revealed that recommendations and social networking are not as important. Moreover, the local garment company places emphasis on internal recruitment and less on qualifications, which is an indication of a slow shift of the local
company towards the use of more objective selection criteria.
US- and UK-based garment companies are using structured recruitment methods. When it comes to managerial and professional/technical recruitments, they
advertise externally, conduct competency-based interviews and use recruitment
agencies frequently.
For clerical employee recruitment, internal advertisement and word of mouth
recruitment are used by the foreign companies. The foreign companies put high
importance on designing and evaluating outcome of the training of employees and
coordinating less on local cultural norms and values in the selection process.
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Table 2. Comparison of Recruitment and Selection Practices between the Local

and Foreign Companies
Firms country
of origin
Bangladesh
UK
US
Well structured, well Well structured in the

defined, in each level mid and upper level,
moderate structure in
entry level
Promotion
of current
employees
Not practised
Observed in the mid Happened few times

level posts
but mostly outsourced
Method of
advertisement
Walk-in, referrals,
newspaper, posters
Walk-in, referrals,
Walk-in, referrals,
newspaper, websites newspaper, websites
Recruitment
sources
Internal
Internal, external
Use of
recruitment
agencies
Not practised
Some times
Apprentices
Not practised
Some times
Some times
For entry level its

walk in interview,
for mid level, verbal
and written test and
interview
For entry level its

walk in interview,
for mid level, verbal
and written test and
interview
For mid and high

level
For mid level

Yes
Not practised
References
check
Not always
Yes
Aptitude test
No
Yes
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Psychometric
testing
Parent company Not applicable as it is Strong influence in

influence
a local company
decision-making
Internal, external
Not practised
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Selection process For entry level its

walk in interview, for
mid level, verbal and
interview
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Job description Unstructured

and specification
Yes
Moderate influence in
decision-making
Training and Development

Training and development strategy is critical to the organizational success of foreign companies. As shown in Table 3, the Bangladeshi garment company tends to
use on-the-job and off-the-job training programmes to maintain the level of skills
among the key employees. Both foreign companies are focused on on-the-job
training.
The local company considers coaching by the supervisors a highly effective
tool for training. A few selected top officials get home country or third country
trainings depending on the management needs in the foreign companies.
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Table 3. Comparison of Training and Development Practices between the Local

Firms country
of origin
Bangladesh
UK
US
Design and
development
Unstructured
36 hours training is
mandatory per year,
Training
implementation
Less priority
given to on-thejob training
Use both on-the-job

More focused on onand off-the-job training the-job training than
modality
on off-the-job
Training evaluation
and outcome
No structured
method found
Training outcome
considered with high
importance while
designing the next
training programme
Support for training
Depends on
in-house and
outsourced
sources
Both in-house and

outsourced resource
utilized.
Influence of parent
company training
strategy
Not applicable
as it is a local
company
Strong influence
observed
Training location
Home country
Coaching by
supervisors
Need based training
In-house resource
gets main focus
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Training outcome
considered
with moderate
importance while
designing the next
training programme
Moderate influence,
local subsidiary
mainly decides the
training strategy
Home and host
country
Followed
sometimes
depends on
needs
Considered a highly
effective tool
Considered a highly
effective tool
Not practised
Practices at the entry

level
Practices at the entry

level
Overseas training
Not practised
Department heads
are sent for overseas
training depending
upon the need
Only for the top

officials
Techniques
for employee
development
Coaching by
supervisors or
department
seniors
Coaching,
apprenticeship,
informal learning, job
rotation, role playing
Coaching, informal
learning, role playing
Skill training by
outside agency
Not practised
Yes, for professional

level, it is applicable
Sometimes
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Job rotation
Home and host

country
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Table 4. Comparison of Performance Appraisal Process between the Local and Foreign
Companies
Firms country
of origin
Bangladesh
UK
US
Unstructured
Rating scale method is

followed
Rating scale method is

followed
Time interval
of performance
appraisal
Once a year
Once a year, usually

December
Once a year, usually

December/January
Problems of
performance
appraisal
Did not cover

all the required
factors
360 degree feedback

is not reflected
360 degree feedback

is not reflected
Feedback of
performance
appraisal
Influence of parent
company
Verbal feedback Written feedback given Written feedback

given to employee to employee
given to employee
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Methods of
performance
appraisal
Not applicable
as it is a local
company
Followed in a limited
extent headquarter
adoption is visible
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To a moderate extent,
headquarter adoption
is visible
Performance Appraisal
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Performance appraisal system used by the responding companies is presented in

Table 4. The survey results showed that key employees, managers and professional/
technical staff are frequently appraised formally on an individual basis. The dominant purpose of performance appraisal is to set personal objectives and review
progress over the past objectives and to assess suitability for promotion or transfers. The methods of performance appraisal are unstructured in the local company.
Both the foreign companies are, however, following rating scale method.
The foreign companies provide written feedback to the employees and the local
companies choose verbal feedback. Table 4 shows that foreign garment companies
extensively integrate and utilize performance appraisal. In contrast, the local company tends to handle its performance appraisal system at a basic level. The local
company does not conduct formal performance appraisal system. The purpose of
performance appraisal in the local company is not linked with career planning. The
measurement criteria of all companies studied are performance oriented. The foreign
companies are relatively more comprehensive, standardized and job specific.
Compensation and Benefits

The result showed that individual performance based pay system is used by the
foreign companies (Table 5). Individual performance/output is the dominant
measurement of performance.
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Table 5. Comparison of Compensation and Benefits between the Local and Foreign
Companies
Firms country
of origin
Bangladesh
UK
US
Compensation
structure
Moderate
Structured
Designing of
compensation
strategy
Follow market
trends
Market trends, competency Market trends,

based payment, house rent competency based
for mid level professionals payment
Non-monetary
benefits
Not practised
Team recognition, paid

vacation, overseas tours
for mid and high level
employees
Payment system
Based on
Based on company
company payroll payroll system added with
system
performance bonus
Parent company
influence
Not applicable
as it is a local
company
Structured
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Success celebration,
paid vacation with
family
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Based on company
payroll system
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To a moderate extent, local Followed to a

adoption is visible
limited extent
Monetary and nonmonetary rewards
Monetary and nonmonetary rewards
Types of benefits Provident fund
Health insurance, gratuity,

provident fund
Gratuity, provident
fund
Festival and performance

bonus
Festival and
performance bonus
Yes. Both male and female

employees get equal
opportunity
Yes. Both male

and female
employees get equal
opportunity
Types of rewards Monetary

rewards
Festival bonus
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Monetary
rewards
Yes. However,
mid and
professional
level posts are
dominated by
male
Equal
employment
opportunity
The formula for compensation seems to be comparable with the local company. In designing compensation strategy, the local company follows market
trends and the foreign companies use competency-based payment system. Nonmonetary benefits are also practised by the foreign companies such as team recognition, paid vacation, overseas tours and success celebration. The local company
tends to show its preference towards a seniority based pay system. In foreign
companies, home country practices do exist in the case of compensation. The
equal employment opportunity (EEO) law is practised in foreign companies.
However, this concept is partially practised by the local company. In the area of
compensation and benefits, parent company influence was not visible.
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Table 6. Comparison of Promotion Policy between the Local and Foreign Companies
Firms country
of origin
Bangladesh
UK
US
Job tenure along Technical competency Technical

with supervisor
competency along
recommendation
with supervisor
recommendation
Importance
of supervisors
recommendation
Highly important Supervisor

recommendation
along with technical
competency count
Highly important
Importance of loyalty
the company
Highly important loyalty along with

competency counts
Loyalty considered
irrelevant,
competency counts
Age as promotion
criterion?
To a moderate
extent
No
Gender as promotion
criterion?
No
No
Importance of right
attitudes and values
Highly important Highly important
Highly important
Promotion test
Not practised
Not practised
Not practised
Importance of
performance appraisal
on promotion
Performance
appraisal is not
practised
To a great extent
To a moderate
extent
Parent company
influence
Not applicable
as it is a local
company
Strong influence
in decision-making
regarding head count
No influence, local
subsidiary is the
sole authority for
promotion
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Core criteria for

promotion
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No
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No
Promotion Policy
Table 6 shows that job tenure and competence get priority in the foreign companies for promotion. Job tenure is, however, the sole promotion criterion in the case
of the local company.
Technical competency is the core criterion for promotion at foreign companies.
Importance of employee loyalty, attitudes and values get the highest priority in
both local and foreign companies. In regard to company influence, unlike US, the
UK-based company has showed influence in decision-making.
Industrial Relation
Table 7 demonstrates that all the companies have maintained a good relationship
between the management and employees. Company rules and regulations are to
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Table 7. Comparison of Industrial Relation between the Local and Foreign Companies
Bangladesh
UK
US
Moderate
Good relationship
employee relation between
management
and employees
Good relationship
between
management
and employees
Rules and regulations
Strictly
maintained
Maintained but
human side is also
taken care of
Maintained. Given
high importance
Administrating labour
agreements
Controlled by
management
Labour agreements
are catered with
proper care
Maintained with
proper care
Bargaining process
Most informal
Informal
Informal
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Employee relation status
No
No
Influence of parent
company
Not applicable
as it is a local
company
No influence is
observed
No
Visibility of political
engagement among
employee within office
Not visible inside Not visible inside

office
office
No influence is
observed
Not visible inside
office
ER
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Existence of trade union
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be strictly followed by the local as well as foreign companies. Similarly, administrative labour agreements are maintained with proper care at both the local and
foreign companies. In all companies, an informal bargaining culture is established
and employees are highly willing to solve the crisis if any arises. The political
engagement of employees is not visible on the factory premises. Nonetheless,
none of the companies, local or foreign, allows trade unions.
HRM Practices between the Local

The HRM practices that were studied are selection, recruitment, training and
development, performance appraisal, compensation and benefit, managerial selection criteria, organizational communication and industrial relations (Table 8).
Local company spends minimum on selection process in comparison with the
foreign companies. All the companies practise on-the-job training for employee
training and development. The US-based company adopts individual performance
based pay system and offers success celebration and paid vacation.
Open-communication methods are less commonly used in the local company. In the UK-based garment company, it is commonly used such as systematic use of the management chain. The US-based company has not followed any
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Table 8. Comparisons of HRM Practices between the Local and Foreign Companies
Firms country
of origin
UK
US
Recruitment
and selection
Spend minimum money

in selection. Panel
interview, aptitude
tests, competencybased interviews and
application forms are
not commonly used
for all levels
Spend more money

in selecting the right
employee. Managerial
level: advertise
externally; Professional/
technical level:
advertise externally;
Clerical/manual levels:
advertise externally,
word of mouth,
reference
Spend more money

in selecting the right
employee. Panel
interview, aptitude
tests, competencybased interviews and
application forms
are commonly used.
Clerical/manual
levels: advertise
externally, word of
mouth, reference
Training and
development
Low in conducting
training needs
systematically, less
priority on-the-job
training is practised
More focused on the

Use both on the job
and off the job training job training than off
the job training
modality. But on the
job gets priority
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Individual
performance based
pay system with
work experience.
Success celebration,
paid vacation with
family for talented
performers
Frequency: less used.

Measure of
performance: individual
performance/output
Purpose: reluctant to
provide feedback
Frequency: once a year.

Measure of
performance: individual
performance/output.
Purpose: set personal
objectives and review
progress again past
objects, give feedback
to employee on their
performance
Frequency: formal
and systematic used.
Measure of
performance:
individual
performance.
Purpose: provide
feedback
Informal criteria
such as emphasis on
informal participation
and group or likeminded involvement,
a cooperative group
action, loyalty
Individual performance Hard criteria such

as bottom line
delivery, more
than one business
area, experience in
another country
FO
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High in pay differentials

between those at
the top and those at
the bottom. Team
recognition, paid
vacation, overseas
tours for mid and high
level employees
Compensation High in pay differentials

and benefits
between those at
the top and those at
the bottom. Nonmonetary benefits are
less practised
Performance
appraisal
Management
appointments
criteria
SE
Bangladesh

Open-communication No formal methods
methods are commonly for all levels
used such as systematic
use of the management
chain, regular
newsletter, regular
meeting, suggestion
schemes
Organizational Top down

communication communication
methods is used
Moderate employee
participation in decision
related to execution
No trade union
Less employee
participation in
monitoring quality
No trade union
Moderate employee
participation in
decision related to
execution
No trade union
SE
Participatory
management
and industrial
relations
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formal methods of communication for any level of management. The

Bangladeshi garment company follows informal criteria in management
appointment such as emphasis on generating unofficial connection. The
US-based company has hard criteria, such as bottom line delivery in more than
one business area. The UK-based company decides management appointments
by individual performance.
From Table 9, it is observed that the US and UK subsidiaries adopt a mixed
HRM strategy in Bangladesh. They are inclined to focus on home and host country
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Table 9. HRM Adaptation between Home and Host Country Effect in Foreign Companies
US
Home and host country

effect

effect

effect

effect
Training and development
Host country effect
Host country effect
Industrial relation
Host country effect
Host country effect
Compensation and benefit
Host country effect
Host country effect
Organizational communication

effect

effect
Recruitment and selection
UK
Performance appraisal
Top management appointments Home country effect

criteria
Home country effect
Middle and lower level

management appointments
criteria
Host country effect
Host country effect
Participatory management
Home country effect
Home country effect
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Table 10. The Effect of HRM Transfer between Home and Host Country in Foreign
Companies
UK
US
HRM practices and system
Hybrid with less

adaptive
Hybrid with moderate

adaptive
Level of HRM transfer from parent

company to affiliate
High
Moderate
Level of home country HRM adaptation

with host country culture
Low
Moderate
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effects in the area of selection and recruitment, performance appraisal, organizational communication and host country effect in the area of training and development, industrial relation, compensation and benefit and middle and lower level
management appointments criteria. The foreign companies are, however, following their home country HRM practices in areas like top management appointments criteria and participatory management.
Table 10 gives a representation of the level of transfer of HRM practices of UK
and US subsidiaries operating in Bangladesh. Both the subsidiaries are observed
following a mixed hybrid system. Both of the companies transfer their home
country HRM practices and adopt less HRM practices from the host country.
Level of parent affiliate and level of home HRM adaptation is high in UK-based
firm. On the other hand, the US-based garment companys HRM adaptation and
level of parent affiliate are moderate. Employee commitment and satisfaction are
quite high in both the foreign companies.
The findings indicated the importance of the strategic integration of balanced
HRM practices for achieving optimum results in foreign companies. These companies
demonstrated concerted efforts in their HRM practices. The foreign companies
planned and integrated HR activities innovatively to strengthen the relationship
between the organization and employees.
Discussion
The results reveal that the three companies of this study are addressing the primary challenge of nurturing a committed workforce that is competent in fulfilling
organizational goals and continually exploring new ways to improve performance.
It is observed that the two foreign companies in Bangladesh have adopted a combination of home and host country HRM practices. Both push and pull force factors are at play in the operation of garment companies in Bangladesh. In
determining strategic issues, expansion and reduction of workforces, push force is
at work. The pull force is exercised for ensuring compliance to the host countrys
practices in the process of HRM implementation. Like Japanese MNCs in US, US
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MNCs in China (e.g., Farley et al., 2004), German MNCs in the UK (Ferner &
Varul, 1999), US MNCs in the UK (Ferner, Almond & Colling, 2005), UK and US
MNCs in RMG sector tend to accept a mixture of both home and host country
practices. The effect of home country is significant both in strategic and functional areas of HRM practices. In terms of the primary HRM issues, the main
strategic decision-making depends on headquarters in UK and US, especially, on
issues such as workforce expansion and reduction. When subsidiary is important,
head quarter wants to keep operations under control rendering decisions from
home country. Moreover, Bangladesh is lacking high level HR professionals and
standardization of HRM practices.
It appears that MNCs, having their headquarters in UK and US adopt a hybrid
approach in managing their relationship with the local subsidiaries. UK and US
subsidiaries tend to comply with the home country practices, especially in the area
of recruitment and selection, performance appraisal, organizational communication, top management appointment criteria and participative management. Due to
strong pressure from the host country to conform with the local environment, the
subsidiaries were more influential in relation to decisions on compensation and
benefit, training and development, industrial relations and middle and lower management appointments criteria.
Institutional influences from the host country, such as legal environment and
utilization of local resources, are the priority for UK and US garment companies
in Bangladesh. Local practices such as reference checking are commonly used by
UK and US garment companies in Bangladesh. This suggests that due to the tight
budget and cost control over the subsidiaries, HR managers are sensitive to minimizing recruitment costs. Results suggest that individual performance is widely
used for rewarding and promoting employees. The behaviour of MNCs in host
countries may be a blend or hybrid in which host country norms reconcile the
influence of the home country blueprint (Innes & Morris, 1995; Schuler &
Jackson, 1987), where both home country and host country effects account for the
measure of individual performance. Study results suggest that both individual performance output and adoption of headquarter performance measure were commonly adopted in the foreign companies. An implication of choice of a modified
style is the influence of host country national culture, and accordingly, the middle
way approach has been implemented by the foreign companies in Bangladesh.
A few key factors seem to influence the foreign garment companies in developing the HRM policies internationally. There is an agreement that the transfer of
knowledge internationally is a key requirement for successful MNCs (Bartlett &
Ghoshal, 2000; Evans, Pucik & Barsoux, 2002; Mariappanadar, 2005; Poedenphant,
2002). Differences of opinion occur about factors that influence the adaptation
of HRM policies and practices from MNCs to MNC subsidiaries. A range of other
factors does impact transfer success and adaptation. These factors include the
impact of social, political, economic and strategic context. The pressures for global
integration versus local responsiveness and the evolving mentality MNCs are
facing (Bartlett & Ghoshal, 2000).
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To respond to these challenges, the MNCs are obliged to develop global competitiveness, multinational flexibility and worldwide learning capability. That is,
a cultural orientation towards learning, innovation and change is most likely to
result in more positive attitudes towards the transfer process, which may lead to
the eventual success of the MNCs (Bartlett & Ghoshal, 1989; Herkenhoff, 2000;
Poedenphant, 2002). This effect is not practice specific, since it reflects characteristics of the subsidiary that apply to all types of activities associated with learning,
innovation and change in general. Therefore, MNCs have a need to formally control and coordinate their subsidiaries. This outcome can be achieved through
reporting systems and targets, or less formally through relationships and the bonds
of corporate culture (Bartlett & Ghoshal, 1989; Dowling, Schuler & Welch, 1987).
With these forms of control, trust between the involved parties is a key element
(Bartlett & Ghoshal, 1989).
In this study, we found that both US and UK garment companies are not adopting local HRM practices, but rather transferring headquarter influence to operate
business in Bangladesh. Assigning specialists in specific HR issues with global
responsibility, such as a top management appointment, as occurs in UK and US
cases, undermines the opportunity of the assigned specialist to develop personal
relationships or a deep understanding of a country or region (Adler, 2001; Dowling
et al., 1999). The Asian subsidiaries regard the assigned headquarter specialist as
effective, which suggests that the formal control mechanism does work well. This
renders the HR headquarter staff assigned to the subsidiary virtually powerful and
with parent country effect (Dowling et al., 1999; Evans et al., 2002). The parent
company trains the local employees to implement headquarter developed training
practices to have some level of control on the quality of the work and employee
performance.
Conclusion and Implication
In an effort to explore the distinctive features of HRM practices across the companies, this study has analyzed and explored HRM practices adopted by two UKand US-based companies and one Bangladesh company. HRM practices used by
UK and US companies and local Bangladesh company are identified. The results
suggest that these two MNCs behave similarly to MNCs from US and UK which
tend to transfer the concepts and practices of HRM system from parent company
to their subsidiaries in Bangladesh; for example, union avoidance strategy. At the
same time, they are adopting varied HR approaches in Bangladesh due to home
and host country effect.
Results indicate that certain major socio-cultural and institutional norms push
the MNCs to adjust practices conforming to local model (Miah & Wali, 2012;
Tayeb, 1998). The companies engage in a considerable degree of HRM transfer,
which results in mixed HRM practices. The conflict that arises is due to the fact
that certain HRM practices are more restricted and affected by the host countrys
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socio-cultural and institutional environment, while other practices are much

expected to be incorporated throughout the MNC and demonstrate an advanced
level of compliance to the practices of the headquarters (Chow et al., 2000; Hasan,
2010; Yeh, 1987).
Finally, this study found that significant exportive HRM approach has taken
place in the two foreign subsidiaries researched. A number of cross-organizational
learning activities were also identified adding to the small body of research that
has emphasized the significance of parent country organizational learning
(Edwards, 1998).
The headquarters influences depend on the control of employment regulations
in the host country, the level of cultural and institutional differences between
home and host country, and the role and purpose of individual subsidiaries
(Harzing, 2004; Myloni, 2002; Rosenzweig & Nohria, 1994). Multinationals may
modify their HR rule orientations with their stages of internationalization (Adler &
Ghadar, 1991; Banai, 1992). For instance, Monk, Scullion & Creaner (2001)
found that Irish MNCs developed more formal and pro-active HR policies, and
appointed a higher number of headquarter expatriates in the overseas subsidiaries
with their increased global operations.
The sample size is not as large as the researchers would have preferred. The
limitations of cross-cultural HRM practices created an obstacle in carrying out
this study to better represent the overall garment industry in Bangladesh. However,
this study makes a considerable contribution to the understanding and implementation of cross-cultural comparison and its overall impact of home and host country effect in a South Asian context. Future research studies in the context of the
garment companies of Bangladesh may include large samples and longitudinal
studies. They should also focus on the changes in the managerial practice arising
from cross-cultural HRM issues (Rosenzweig & Nohria, 1994; Tayeb, 1998;
Taylor, Beechler & Napier, 1996). Such studies would be more helpful in implementing the best international HRM strategy to contribute to successful foreign
MNCs garment company HRM practices that are most appropriate in Bangladesh.
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A Comparative Study of HRM Practices Between Foreign and Local Garment Companies in Bangladesh

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South Asian Journal of Human

Md. Khasro Miah

Md. Khasro Miah and Muhammed Siddique Hossain

HRM Practices between Foreign and Local Garment Companies

Home and Host Country Effect on HRM Practices

Rationale of the Study

Md. Khasro Miah and Muhammed Siddique Hossain

manufactured in Bangladesh. With only 3 per cent contribution to the GDP of

Background Information of the Garment Companies

Case One (UK-based Garment Company)

Case Two (US-based Garment Company)

HRM Practices between Foreign and Local Garment Companies

the company is around $3,056.7 million. It has manufacturing and distribution

Case Three (Bangladesh-based Garment Company)

This company was established in 2004. It has been successfully maintaining

Sampling and Data Collection

Md. Khasro Miah and Muhammed Siddique Hossain

Table 1. Background Information of Local and Foreign Companies

Yarn dyed cotton, CVC Ready-to-wear

Total asset (US $ in millions)

% Sale in domestic market

Number of strike days

Average monthly salary

Employee turnover rate

Only local employees

Some researchers have contended that quantitative research methods may

HRM Practices between Foreign and Local Garment Companies

Recruitment and Selection

Md. Khasro Miah and Muhammed Siddique Hossain

Table 2. Comparison of Recruitment and Selection Practices between the Local

Well structured, well Well structured in the

Observed in the mid Happened few times

For entry level its

For entry level its

For mid and high

For mid level

Parent company Not applicable as it is Strong influence in

Selection process For entry level its

Job description Unstructured

Training and Development

HRM Practices between Foreign and Local Garment Companies

Table 3. Comparison of Training and Development Practices between the Local

Use both on-the-job

Support for training

Both in-house and

Need based training

Practices at the entry

Practices at the entry

Only for the top

Yes, for professional

Home and host

South Asian Journal of Human Resources Management, 1, 1 (2014): 6789

Md. Khasro Miah and Muhammed Siddique Hossain

Rating scale method is

Rating scale method is

Once a year, usually

Once a year, usually

Did not cover

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