Human Resource Culture and Organizations- Grameen Bank - Research Paper Example

Human resource Culture and Organizations- Grameen Bank Brief background to the organization and its environment: The Grameen Bank started its journey in 1976 with the idea of Professor Muhammad Yunus, Head of the Rural Economics Program at the University of Chittagong. Professor Yunus conducted a research project to study the possibility of inaugurating an automated credit delivery system to bring the rural poor population in the domain of banking services facilities. Behind the formation of the Grameen Bank there were mainly five objectives. The first objective was to provide the banking facilities to the rural poor. The second objective was to rule out the power of moneylenders who generally exploit the poor by providing them money. The third objective was to generate employment opportunities for the poor and unemployed rural communities of the Bangladesh by the provision of self-employment. The fourth objective was to form an organizational structure to bring the disadvantageous and poor rural women under a money earning scheme which was easy to understand and manage and the fifth objective was to alter the vicious circle of low income, savings and investment into the virtuous circle of more income, savings and investment through the provision of credit facility. (Berqquist, 2009). At the initial stage, the research was aimed at finding the possibilities of implementing such credit mechanism facility for the village Jobra and the other adjacent villages for a period of three years, from 1976 to 1979. Then in 1979 the study as extended to include the Tangail district with the help of the nationalized commercial banks and financed by the central bank of Bangladesh. The success of this study opened the doors for using its business model for the other districts of Bangladesh. The year 1983 is a memorable day for the Grameen Bank as on that day the Grameen Bank project was established as an independent bank by the legislation of the Bangladesh government. Establishment of the Grameen Bank is a significant achievement for the poor people of the Bangladesh as the business model of the organization has contributed in a considerable way to bring the poor communities in the prime functionalities and monetary circulation of the economy. At present the rural poor who are also the borrowers of the bank hold the 90% share of the organization. The government holds the rest 10%. (A short history of the Grameen Bank, April 15, 2010; Yunus, n.d.). Mr. Yunus understood that the conventional practices of the banking system in Bangladesh focused mainly on the people who were already in better social and economic conditions. Keeping this in mind Professor Yunus thought to form an alternative institutional banking structure, which would be beneficial for improving the wellbeing of the poor, and neglected portion of the society. The formation of the Grameen Bank was the ultimate results of such thought of Professor Yunus. In December 1999, the Grameen Bank operated with its 67,691 centers in 39,706 villages of Bangladesh. Among its members, almost 95% were women. This information shows that the aim of the Grameen Bank to bring the rural poor women into the line of productive activities has significantly been achieved within the 25 years of its formation. Within this period the amount of pay out of money, the amount of loans for housing and the amount of savings have also raised significantly. Besides, the bank also recovered its outstanding loans at almost 98% rate. The numbers of employees worked in Grameen Bank have also increased appreciably. With the increase of employment the productivity of the bank has also raised. (Grameen Bank, 2003; Bernasek, 2003, p 369) The success of Grameen Bank has aroused the attention of many scholars. They have become very surprised at the upcoming empowerment of women through the micro credit model of the bank, which has played a major role to alter the economic as well as socioeconomic conditions of the rural poor of Bangladesh. (Banker to the poor-the story of the Grameen bank, n.d.) The reality of this success story clearly entails the well-structured and well-manipulated functions of some factors. Such factors can be identified as the Bank’s well-organized framework, operational mode, unique organizational intervention system, outlook, the structural decentralism, management ethics and culture, institutional set up and success of human resource management. Justification and outline explanation of the theoretical framework: In the arena of human resources management, the notion of organizational culture is very well known and the most discussed issue. But the proper identification of the organizational and the human resource culture from the organizational environment is very difficult. The inclusion of the notion of management philosophy makes it further difficult to spot such culture. But we can undoubtedly say that a sophisticated culture of human resource management is such an element in the business environment that helps to channel and manage the business environment to the suitable and required direction and assesses the overall business culture of an organization. Human resource culture of an organization can be viewed as the ethics, myths, values, objectives, internal relationships and short and long term goals of an organization. Though generally it is believed that there is a single culture existing in an organization, yet there may be differentiated subculture within the same organization depending on its people and location. (Organizational Culture and Climate, January 10, 2010). This is very crucial to understand in order to recognize the concept of organizational culture for the human resource managers of a business. The organization can therefore correctly and appropriately allocate the constituents of this culture into a model, which are highly correlated with the performance of that business. The strengths, weaknesses, experiences, background, the future possibilities and relations can understand the inherent human resource culture of an organization with its employees. The identification and execution of such a culture are managed by the leaders of an organization, whereas, the responsibilities to contribute to this culture are followed by the employees of that organization by obeying and conveying the stipulated guidelines. (Organizational Culture: Corporate culture in Organizations, 2010; Fugate and Lassk, n.d.). Such a theoretical framework for analyzing the cultural competencies of an organization should be justified in the light of the human resource and organizational ethnicities of that organization. Identification (only) of a central issue to be considered: One of the main reasons of the success of the Grameen Bank is its organizational framework and the management policies towards this. Targeting the specific group of population the bank has evolved into a well-managed and well-structured set up. In its framework, it has on one hand a good delivery system and on the other hand a good receiving system. Regarding the delivery system the bank has formulated a set up with its branch and area offices, zonal centers and a head office. Its receiving system comprised of many groups and centers. For managing the operation of groups and centers, the bank has maintained a good cultural bondage and relationship between these two set ups. This has led the bank to smoothly carry out its activities to its desired direction. The founding brick of the Grameen Bank’s receiving system is the methodology of group organization and amalgamation of those groups with the center. The operational culture of the Grameen Bank is aimed at delivering its services to the needy and poor population through its specific exclusion criteria, which excludes the richer population to access the services of the bank. The bank has also given its priority to provide loan to the poor women through its distinctive delivery system, which has been designed to consider the socioeconomic requirements of the poor. In its system, the officials of the banks go to the poor, the prospective clients of the bank with the provision of credit. The central issue of such well-organized and operational foundation of the Grameen bank ultimately relies upon the management ethic and cultural management of the human resource organization of the bank. Therefore it is significant to analyze such a well functioning cultural environment of the bank so as to completely evaluate its success. (Education and Poverty Eradication, 2001; Johansen and Nilsson, 2007; Berqquist, 2009, p.16) A critical analysis of the chosen central issue and its applicable solution: Overtime the bank has developed a distinctive management custom and culture. Such a progress has become possible due to the efficiencies and abilities of its people. The management and employees of the organization has adopted the cultural competencies in the organization through their learning abilities, their innovative ideas, their ingenuousness, lucidity and their honesty. Such a healthy environment within the organization has developed a well-built structure that actually directs and regulates the organizational actions. All the groups and centers of the bank are identified by their own environment. All these organizations have achieved a fine-tuned integrated cultural relationship with the bureaucracy of the Grameen Bank. The institutional set up and functionalities among the groups, centers and management of the bank are very strong which has eventually sophisticated the activities of the bank. The transparency of the decision-making personnel of the bank has resulted in building up a relationship of trust between the bank’s staffs and the clients. The belief of the bank to maintain honesty and clarity in its work has been seen through the demonstration of its actions. All the banking transactions are done in the presence of the staffs and the clients of the bank. Such a well-governed transaction mechanism has become possible through the formal as well as the informal information management of the bank. The outstanding performance of the personnel of the bank is undoubtedly one of the key reasons for the success of the bank. The specific and unique recruitment and training programs of the bank are the reasons for the great motivation of the staff working for the bank. The personnel of the bank are trained in such a way that provides them the impetus to understand the requirement of very tough work, their honesty, seriousness and their obligations to stay in the rural area. All the personnel are told about such strong work culture of the bank at the time of their recruitment and from the beginning of their work with the bank. The employees are also provided thorough and precise fieldwork training. One of the important characters of the management structure of Grameen Bank is the higher level of independence, which the bank has given to its field investigators. For the administrative policymaking the zonal offices are mainly responsible. In this training schedule many people quit which help the bank retain only the honest and committed people in its workforce. Before joining the Grameen bank such recruitment and training mechanisms make the people aware of the fact that if they join this bank they will require to work hard and receive the same salary that their counterpart earn in the government sectors. There are some basic objectives behind such training of the Grameen Bank. Through the training the bank aims to generate the interest of the employee on the subject of Micro finance. (Hassan, 2006, p.101; Hossain, 2010). It also encourages the employees to take responsibilities towards their self-inspiring learning, which they can share with their colleagues and coworkers. The training program helps the employees of the bank to discover their basic role in the organization as well as in the global society. The training program also intends to identify the different backgrounds of all the participants. In its training program the Grameen Bank provides the provision of gaining the in-hand and first-hand knowledge on the operational ideas, values and execution techniques, which are essentially required at any period. The participants of such training can separately or in a group visit an institution. In an exposure visit, a one-day visit at the head office is followed by a field visit for some days in a branch. Such a exposure visit is finally completed with a review at the head office. The basic training program of the Grameen Bank is organized in various countries for providing training on the credit delivery and credit recovery techniques as imparted in the model of the bank. Basically such programs incorporate various rules and regulation, accounting methodologies, monitoring mechanism, etc., of the Grameen Bank. However, there are different courses available for the field investigators and the senior executives. Besides, there are also different media programs available, which are specially designed for the press and media personnel interested in making documentary films on the culture, operational techniques and mechanisms and the borrowers of the Grameen Bank. There are also many scopes in the bank for the researchers. They can come to the bank for performing their research activities in accordance with their own perspectives and objectives. For doing their research, the researchers are required to submit their resume along with an introductory letter. They are also supposed to provide details on the objective of their research, the prospective techniques and methodologies that they are expected to apply and the status of the survey questionnaire which they may use in their study. Many internship programs are also available in the Grameen Bank. The opportunities for the unpaid intern are available for the students at the bank across the world from the reputed academic institutions. In these internship programs the students get detail knowledge on the values, cultures and executive techniques of the Grameen Bank. Besides, The interns can also understand how the Grameen Bank affects the economic and cultural lives of its members. (Ahmmed, n.d) All these factors have enabled the employees of the bank to work under pressure, to take challenges and to work at different types of situations in a very successful way. The management of the bank has allowed many incentives and rewards to the employees. The employees of the bank get huge incentive to work effectively and without corruption when the management recognizes their works and they are allowed to receive quick advancement. The perception and feelings of being a part of such an organization that is greatly recognized for its culture, value and international identity across the world also motivated the employees in a tremendous way. Besides, there is a sense of empowerment in the bank, which is felt by both the employees, and the clients of the bank. At the group level the human resource culture of the Grameen bank has enabled the participants to feel the leadership power that is rotated among the group members. (Sarker, 2001, pp 10-11) From its inception the Grameen Bank has worked very hard for developing its human resource culture in its organizational structure. In October 1983, the bank achieved its independent status. At present it has almost 2319 branches all over the country. As the recognition of the work, the bank provides 100 percent achievement award in the form of colour-coded stars to its employees and its branches when they complete any specified work. The highest performance level of a branch is designated by five-stars. Sustaining a repayment record of 100 per cent, 1553 branches among the 2319 branches have received green stars in December 2006. During the same year, blue stars have been awarded to 1627 branches for earning enormous profits. Violet stars have been awarded to 1375 branches for meting all their outstanding by their earned profit and amount deposited. In this year brown stars were applied by almost 337 branches. Brown stars are provided by the Grameen Bank to its branches, which ensure 100% education for the children of the member families. 54 branches submitted the applications requiring for red stars in the same year. Red stars indicate the performance of a branch regarding its activity towards transforming the borrowers’ families’ from below poverty line to over poverty line. (Bhagat, Dube, Gawande, Mittal, Sen, and Khandelwal, 2009; p 459). Concluding remarks The successful implementation of the micro credit model with a continuous well-structured human resource management has enabled the Grameen Bank to become a professional entity within a very short period of time. It has achieved almost all the characters of a successful professional organization. The model of the Grameen Bank has been processed constantly so as to give it a solid structural foundation by responding to the demand of political atmosphere, social atmosphere and also the cultural atmosphere of rural Bangladesh. The bank has always followed learning through experiencing approach. This has allowed it to evaluate its human resource management and culture for initiating the innovative culture within the organization with its expansion over the years. The institutionalization of the Grameen bank has become possible for the successful implementation of well-defined objectives by its members in a compatible way in one hand and through the establishment of practically formulated, tested operating culture and executing system. With the possibility of easy replacement of such systems have also enabled the bank to materialize its core objectives of strengthening the credit facilities in the rural area of Bangladesh. Like all the other successful organizations of the world, its management culture and human resource strategies have developed a unique and exclusive approach of its own to run its operating system. The Grameen Bank always follows a professional managerial mechanism within its organizational and human resource culture. The practice of such mechanisms has guided the bank to establish and develop managerial leadership in all the aspects and levels of its management behavior. The Grameen human resource management structure is very solid but not massive. Besides, it is very adaptive and flexible in nature. In the internal environment of the Grameen Bank, decision-making practices by a balanced participation and integration of human resources are always done by contingent manipulation of communication and leadership practices. Such practices have become realistic with the violation of conservative wisdom. There are many graduate managers and personnel of the Grameen Bank having no work experience. With such employees the bank has developed a professional work culture through the provision of extensive training programs and executive development schemes. The bank has targeted to combine the theoretical knowledge with the practice of real management techniques. This objective of the bank has allowed its staffs to apply such knowledge in practical aspects. With this the bank has also encouraged to practice a distinctive set of values within its structure for motivating its employees to take up challenging works and accomplish those works accordingly. The managers of the Grameen Bank have already proved their capabilities by demonstrating the developmental activities of the bank. The managers’ independent activities have proved that they are very efficient in sketching, arranging and implementing such developmental projects of the bank. They have done it without the proper assistance of the head office. All these human resource management cultures and practices are fine enough to say that the bank is standing on a sound institutional balance. The presence of a leadership program, enough resources and strong internal structural foundation has certainly signalled that the success of the Grameen Bank will be sustainable in coming future. However, the sustainability issue of the cultural practice of the Grameen Bank is also associated with the sustainability of its institutional set up. The experiences of the Grameen Bank till now suggest that the bank has achieved sustainability towards its poverty-alleviation objectives as an institution. Since the bank was formed considering the poor population of the nation, the sustainability of its organizational and human resource culture ultimately depends on their cooperative risk-posture capabilities. The poor population owns almost 90% of the bank’s capital. This has enabled them to actively participate in the decision making process and manage the policies of the bank. The assertion of their privileges of ownership programs and policies will further strengthen the institutional and cultural practices. The Grameen Bank is also expected to remove the gap between the state and the local communities that is very essential to build the institutional and cultural base. The sustainability of the Grameen Bank is highly dependent on its institutional development and human resource management. The provision of the management practices towards the assessment and adaptability of decision-making mechanisms have given the personnel more liberal and sophisticated way to complete their assigned jobs. In this way, the bank has generated a dedicated workforce that is very much motivated through the objective of the Grameen Bank in helping the poor population of the rural Bangladesh. As the field officers have taken almost all the responsibilities regarding the decision-making processes of the bank, the head office has focused on broader issues such as policy implementation and development of the bank’s functionalities. The pay arrangements and incentive systems have great influence on the overall performance of the staffs and the turnover rates. The opportunities in learning and experiencing are also very influential in motivating the payment of the employees. All these facilities within the structural set up of the bank have resulted in the practice of higher productivity, which the bank is experiencing over the last decade till now. However, one point should be noted here. Success story of the Grameen Bank clearly indicates that it has sustained its activities and cultural practices over the time. At present it is continuously achieving more impetus to sustain such activities─ whether it is towards organizational practice or towards the human resource management. But to sustain all such cultural practices in future the bank needs to monitor its organizational set up and continuously evaluate and justify all of its activities. (Khandker, Khalily and Khan, February 1994; Scrapek, 1999, p 40). References: 1) Sarker, E.A (2001), “ The secrets of success: the Grameen Bank experience in Bangladesh”, LMD, Asia Pacific Press at the Australian National University, Vol 2. Available at: http://unpan1.un.org/intradoc/groups/public/documents/apcity/unpan002581.pdf (Accessed on: 04/05/2010) 2) Bhagat, T, Dube, A, Gawande, M, Mittal, R, Sen, S and Khandelwal, V (2009), “Grameen Bank: Micro Finance”, Symbiosis Institute of International Business, Scribd. (Available at: http://www.scribd.com/doc/29193281/Micro-Finance-Grameen-Bank (Accessed on: 04/05/2010) 3) Khandker, S, Khalily,B and Z, Khan (February 1994), “ Is Grameen Bank Sustainable?”, HRO working papers. Available at: http://web3.coehs.siu.edu/SSW/bangladesh/articles/Is%20Grameen%20Sustainable%20World%20Bank%20Review%207.pdf (accessed on: 04/05/2010) 4) “Education and Poverty Eradication” (2001), United Nations Educational, Scientific and Cultural Organization. Available at: http://www.unesco.org/education/poverty/grameen.shtml (Accessed on: 04/05/2010) 5) Johansen, M and C, Nilsson (2007) “Microfinance and Poverty Alleviation: A case study of grameen bank and BRAC”, University of Skovde. Available at: http://his.diva-portal.org/smash/record.jsf?pid=diva2:3231 (accessed on: 04/05/2010) 6) Hassan, M (2006), “ Institutional Transformation of Poverty-Focused Microfinance Institutions in Bangaldesh, Nepal and Malaysia”. Available at: http://eprints.usm.my/8639/1/INSTITUTIONAL_TRANSFORMATION_OF_POVERTY-FOCUSED.pdf (accessed on: 04/05/2010) 7) “ Grameen Bank”, (2003), Stanford Graduate School of Business. Available at: https://gsbapps.stanford.edu/cases/documents/SM116.pdf (accessed on: 04/05/2010) 8) Ahmmed, M (n.d.), “Managing the growth of microcredit programs: Human resource management including recruiting, training, and motivating staff Available at: http://www.pksf-bd.org/speeches%20&%20Papers/Dr.Mostaq%20Ahmmed/Managing%20the%20Growth%20of%20Microcredit%20Programs.pdf (accessed on: 04/05/2010) 9) Fugate, D and Lassk, G, F (n.d.)“An Exploration of How Cross-Cultural Dimensions Influence the Implementation of Microenterprise Programs”., Northern University. Available at: http://marketing.byu.edu/htmlpages/ccrs/proceedings05/fugate-lassk.doc (accessed on May 4, 2010) 10) Berqquist, P (2009), “ Breaking the vicious circle of poverty”, essays.se, Available at: http://www.essays.se/essay/77a164fe2c/ (accessed on May 4, 2010) 11) Pickering, K and Mushinski, W, D (June 2001), “Cultural aspects of credit institutions: transplanting the grameen bank credit group structure to the pine ridge Indian reservation”, Journal of Economic Issues; Jun2001, Vol. 35 Issue 2, p459,-68, Available at: http://www.jstor.org/pss/4227678 (accessed on May 4, 2010) 12) Scrapek, E(1999), “The grameen bank: rural credit in Bangladesh”, SCRAPEK Available at: http://www.arts.usask.ca/economics/skjournal/sej-2nd/sej2-scrapek.pdf (accessed on May 4, 2010) 13) Hossain, I (2010), “ An experiment in sustainable human development: the grameen bank of Bangladesh”, Journal of Third World Studies, Spring, Available at: http://findarticles.com/p/articles/mi_qa3821/is_199804/ai_n8793974/?tag=content;col1 (accessed on May 4, 2010) 14) “ Banker to the poor-the story of the grameen bank” (n.d.), SHVOONG. Available at: http://www.shvoong.com/books/biography/1669805-banker-poor-story-grameen-bank/ (accessed on May 4, 2010) 15) Bernasek, A (2003), Banking on social change: grameen bank lending to women”; International journal of politics, culture and society, vol 16. no.3, pp.369-385, Available at: http://www.springerlink.com/content/t286482p4h3350jw/fulltext.pdf?page=1 (accessed on May 4, 2010) 16) Yunus, M (n.d.), “ Grameen bank, microcredit and millennium development goals”, Available at: http://vecam.org/ijumelage/IMG/pdf/Grameenbank.pdf (accessed on May 4, 2010) Read More