HRM Project

on
Overall HRM practices at OTOBI Bangladesh Limited

BUS-601
Group-United States
Prepared for:
Mohammad Khasro Miah
Prepared by:
Name

ID

Anika Mobin Ahmed (Section: 3)

1320653660

Salman Ahmed (Section: 3)

1320655660

Tasnuva Oeishi (Section: 1)

1320856660

Tanzin Sultana (Section: 1)

1321375660

EXECUTIVE SUMMARY
OTOBI is a popular and sophisticated furniture company in Bangladesh with its various outlets
all over the world. The furniture industry is growing at a high rate. Major furniture companies
like Partex, Akhtar, Brothers, Navana, Furnitec and Hatil all have established their business in
Bangladesh. OTOBI has a well established HR department with its efficient and qualified
personnel. The purpose was to find out the HR strategies the company follows and other benefits
they offer to their employees. The company has a well defined mission and vision statements.
Also they manufacture the products at low cost with high skilled labor force. They follow both
the cost effective and the differentiation strategies for the development of their products.
Different unique marketing strategies and other promotional activities are part of the company.
The well defied sales force is the asset of the organization. OTOBI uses print, outdoor and the
electronic media for the promotion of their products. The company has well decorated
showrooms in all over the world. The interior designs of the showrooms are so beautiful that
most of the customers are attracted to buy the products of OTOBI.

OTOBIs HR department is well organized. The HR manager monitors all the HR related
activities like recruitment, training, compensation, performance appraisal and others. They use
proper selection method to hire the employees. Their objective is to find out those employees
who have proper knowledge and skills. Most of the employees are interested to work in OTOBI
because of its well developed HR department. The company tries to follow the fair recruitment
system for its employees. The company conducts the performance appraisal process for its
employees one time in a year. They try to follow the fair performance appraisal for its employees
so that their strong and weak performances can be easily identified. OTOBI has various benefits
and facilities for its employees. Different facilities include gratuity, medical insurance, provident
fund, festival bonuses, etc. Also they have well established ethics, justice and fair treatment for
their employees. OTOBI is a successful company because of stylish and good quality furniture.
They focus on different aspects like value, innovation and team building which are considered as
a competitive advantage for the company. OTOBI has a high employees retention rate. Also the
company conducts the exit interview for its employees who left the job. From this interview, the
company wants to find out whether they have any lacking or not.
2

OTOBI has a transportation facility especially for its female employees which motivate them to
work here. In the future, the company has a plan to have HR automation, in house training team,
cafeteria management system for their employees. Also, OTOBI will change the performance
appraisal system. Recently they follow the combined methods of the performance appraisal
system. After some years, when the company will be more matured, it will follow the peer rating,
alternative ranking, graphing rating scales, 360 degree feedback and others for its employees.
Therefore, the company has a plan to invent new products and to increase its outlets all over the
world.

BACKGROUND OF THE FURNITURE INDUSTRIES OF BANGLADESH

The furniture industry is one of the leading sectors of Bangladesh and it has a large export
potential (Uddin, 2012). The industry has a large amount of members all over the country and its
key players are located in Dhaka employing around 150,000 people. Almost 41,560 furniture
manufacturing enterprises are situated in all over the country. The estimated market sizes of the
industries are around BDT 100 billion (USD 1250 million). These industries are growing at the
rate of 19.5 percent. The data of Export Promotion Bureau shows the impressive growth. The
authorities hope that it will be possible to earn about BDT 8 billion (USD 100 million) by 2020
from export (The Daily Star, 24 March 2010). The furniture industry is considered as a thrust
sector as the economy of Bangladesh is growing at a first pace. In recent time, the top local
furniture firms are OTOBI, Partex, Akhtar, Brothers, Navana, Furnitec, Hatil. The largest
furniture market in the country is the Mirpur furniture market (BFID Expo, 2014).

EVOLUTION OF FURNITURE INDUSTRIES OF BANGLADESH

The furniture industry was mainly developed as a cottage based industry. In the early nineteenth
century, the furniture industries were transformed from the cottage based to the production
industries in Bangladesh. Furniture businesses started to grow with advanced machineries,
creative designs and using a variety of materials. Different categories of furniture were made
from melamine board, processed wood, particleboard, etc. In recent time, Bangladesh has

become popular in making a wide variety of good quality and international standard furniture.
People are now more interested to buy the local furniture rather than the foreign furniture. In
1995, Bangladesh started to export its furniture to foreign countries (The Daily Star, 2014).
The industry is growing at a faster rate. There are 70,000 enterprises and an average of 600
workers is working in each enterprise. The furniture enterprises can be divided into five groups
large, micro, small, MSM 1 and MSM 2. The micro and small furniture firms are less efficient.
These firms need a high range of technical supports for their workers. The medium enterprises
are more efficient and they have the ability to maintain industrial standards. However, they have
less diversified products range and have to sell their products with lower margins.
Manufacturers in this industry have a large volume of profit. The increasing number of profit is
dependent on the automation in production, size of enterprise, diversification of products and
raw materials, etc. Most of the enterprises are large in size. In 2008, the industry has a total
production of 607 million. The industry also has a large number of local and international
suppliers of raw materials (BFID Expo, 2014).

Furniture sector is the labor intensive sector of Bangladesh. The country has a large number of
low cost manpower which is a competitive advantage in the world market. Almost 41,560
enterprises and two lakh people are working in this sector. Also, 60 percent of the raw materials
of the furniture are imported from different countries of the world. Among them, major
importable items are wood coating materials, timber, hardware and accessories, fabrics, etc. This
sector sometimes faces difficulties like paying the import duties of raw materials. Another
problem is that, there is a shortage of skilled manpower to handle the modern equipments. To
overcome this problem, it is necessary to have some technical schools which will offer different
short term trade courses. Also, government should take enough initiative to address this issue
(The Daily Star, 2014).

Different categories of furniture produced by the furniture industries of Bangladesh are bed room
furniture, office furniture, and restaurant furniture. Also, furniture is essentials in hospitals,
4

hotels, public halls and auditoriums. Among these categories, different products are beds, tables,
chairs, dressing tables, wardrobes, sofa sets, dining tables, etc. Gradually modern furniture,
including steel, metallic, plastic and wooden ones began to be used widely. There is a large
variation in furniture usage.
Summary Table of Furniture Industry

Name of the
Furniture
Company

Year of
Establishment

Total
Number of

Core Products

Employees

Number

Annual

of

Growth

Outlets

Rate

415

60%

29

19%

23

12%

10%

57

25%

Home, Office,
OTOBI

1975

Hospital and

5000

Industrial
furniture.
Home, Office,

Hatil

1989

Hospital and

3000

Industrial
furniture.
Furniture for

Akhtar

1976

bedroom, living

2514

room, dinig room,

kitchen.
Home, Office,

Navana

2002

Hospital and

800

Industrial
furniture.
Door, Bed Room,

Partex

1962

4500

Dining and Living

furniture.
5

Living, Drawing,
Brothers

700

Bedroom

12

12%

10%

7%

furniture.
Home, Hotel,
Furnitec

2004

500

Industrial and
Office furniture.

Wood Marc

2006

Home, Office,

200

Kitchen furniture

Source: (The Daily Star, 8 September 2013).

From the summary table of the furniture industries of Bangladesh, top eight furniture companies
can be explained. OTOBI has a leading position in the furniture industry. Other than OTOBI, the
companies like Hatil, Akhter, Partex and Navana furniture are also in a good position in
delivering different furniture to the customers. Brothers, Furnitec and Wood Marc are in a
medium position in case of delivering high class furniture to the customers ( The Daily Star, 12
April 2014).

Hatil is another furniture company which was established in 1989. The company has 3000
employees who are responsible for producing high quality furniture. The core products of the
company are home, office, hospital and industrial furniture. It has 29 outlets all over the country
and has an annual growth rate of 19% (Hatil BD, n.d).

Akhtar is the third furniture company which was established in 1976. The company has 2514
employees who are responsible for producing high quality furniture. The core products of the
company are bed room, living, dining and kitchen furniture. It has 23 outlets all over the country
and has an annual growth rate of 12% (Akhtar Group, n.d).
6

Partex is the fourth furniture company which was established in 1962. The company has 4500
employees who are responsible for producing high quality furniture. The core products of the
company are door, bed room, dining and drawing furniture. It has 57 outlets all over the country
and has an annual growth rate of 25% (Partex Star Group, n.d).

Navana is the fifth furniture company which was established in 2002. The company has 4500
employees who are responsible for producing high quality furniture. The core products of the
company are home, office, hospital and industrial furniture. It has 6 outlets all over the country
and has an annual growth rate of 10% (Navana Furniture, n.d).

Brothers is the sixth furniture company. The company has 700 employees who are responsible
for producing high quality furniture. The core products of the company are living, drawing and
bedroom furniture. It has 12 outlets all over the country and has an annual growth rate of 12%
(Brothers Furniture, n.d).

Furnitec is the seventh furniture company which was established in 2004. The company has 500
employees who are responsible for producing high quality furniture. The core products of the
company are home, hotel, industrial and office furniture. It has 2 outlets all over the country and
has an annual growth rate of 10% (Furnitec BD, n.d).

Wood Marc is the seventh furniture company which was established in 2006. The company has
200 employees who are responsible for producing high quality furniture. The core products of
the company are home, kitchen and office furniture. It has 1 outlet all over the country and has
an annual growth rate of 7% (Wood Marc BD, n.d).
7

Growth of the Furniture Industries

100%
50%
0%

Source: (The Daily Star, 8 September 2013).

Most of the furniture companies in Bangladesh do not have the well established HR department.
Only few of them like OTOBI, Partex, Hatil, Akhtar and Navana have HR departments. These
companies try to follow effective HR strategies which include recruiting, training and retaining
good employees. They continuously change the HR policies which are necessary for the success
of their organizations. When companies have well established HRM strategies, it is possible to
deliver superior products to the customers. High quality furniture are designed and produced by
the creative and efficient employees. Most of the furniture industries mainly engage in providing
better HRM facilities than the competitors. Employees will be more attracted to those
organizations which offer superior HR facilities than the competitors. Also, the companies
arrange different training programme to improve the skills, knowledge of the employees.
Through the performance appraisal, they try to find out in which area they have lacking and train
them in that area (Quilch & Bloom, 1 January 1999).

ANALYSIS OF OTOBI
INTRODUCTION

The objective is to analyze the HR practices of OTOBI from HR perspective. Also to find out
what type of policies or strategies they follow in their different sections of the HR department
like recruitment, training and development, compensation, performance appraisals and others.
The company will be visited and will take the interview of HR manager to know about the HR
policies and practices of the company. Also employees of other departments will be interviewed
to know what type of HR facilities they usually get from the company.
We have established the following research questions according to the human resource
management practice of the company OTOBI.

What human resource management strategies the companies follow for the development
of the OTOBI products?

What type of human resource management facilities and benefits the company offers to
their employees rather than other furniture companies?

EVOLUTION OF OTOBI
In 1975, Nitun Kundu established his company, a furniture store featuring his own designs called
OTOBI. He completed his graduation from with a first class first from the Institute of Fine Arts
before the liberation of Bangladesh. At first, he wanted to be a teacher. But later, to support his
family, he used his creativity and innovative spirit. He started his business with a small workshop
with an investment of BDT 5,000 and a showroom in Elephant Road, Dhaka (New Age Business,
28 March 2009).
However, Nitun was not a professional manager and looked for help from a consultant in 1991.
The consultant sketched out an organ gram, policies, and procedures that helped the business to
grow further. Nitun was successful in establishing its three headquarters in Ashulia, Shyampur,
and Mirpur in Dhaka. The head office of the company is located at Gulshan with its 15,000
employees. The country has a retail network all across the country (Wikipedia, 2012).
9

Since furniture is the most important ingredients of the interior decoration of a room, there is a
high demand for the stylish furniture which can enhance the look of a room. OTOBI has become
one of the top three brands in the South region. OTOBI has exotic ranges of stylish products
which has created an excellent platform to fulfill the needs of the customers. OTOBI is also
considered as an innovative furniture company, but because of a large number of competitors, it
is losing its market share.

Animesh, son of Nitun Kundu, graduated from Cornell University, USA, realized that his
charismatic and legendary father was an artist at heart and not a proficient businessman. He spent
two years in the various departments of the company during his internship. Animesh realized that
he needed the professional help in getting the business to the next level. A head-hunter brought
Sabbir Hasan Nasir to the Kundu family business. Sabbir had completed his BSc in Engineering
from BUET (Bangladesh University of Engineering and Technology) and got an MBA from IBA
(Institute of Business Administration, University of Dhaka). He worked for different companies
like Bata, Tetra Pak, Golfrate in marketing, operations and strategic planning sections (The Daily
Star, 1 February 2009).

In the middle of 2006, the new leadership of OTOBI took over, about the three months before
Nituns death. Nitun Kundu was the Chairman and Advisor of the board. Whereas Animesh
Kundu was appointed as the Managing Director and Sabbir Hasan was the CEO of the company.
The separation of ownership from management was beneficial for the company. To become the
global brand, the company took different initiatives like introduction of performance
measurement tools, balanced scorecards, implementation of the massive enterprise resource
planning system from SAP. The company modified their research and forecasting models. They
also implemented values of innovation discipline, and team building which became the root of
OTOBI culture. They also tried to establish the new technology in the business. The number of
employees grew more than 15,000 within three years (Bangladesh Economic News, 24 March
2010).
10

OTOBI has the vision to develop into a complete lifestyle brand offering innovative and
inspiring space solutions. OTOBIs range of furniture, furnishings and appliances are developed
and marketed to serve all ages and stages of homes, industries, institutions, hospitals and offices.
OTOBI is the market leader in the wooden furniture segment. The brand has three main
categories of furniture basic, economy and premium. Also, there is a range of leather furniture
for the drawing room. All OTOBI products have features that promise to maximize user
satisfaction. Different products of OTOBI are beds, computer tables, dressing tables, dining
tables, sofa sets, show cases, wardrobes, chairs, tables, wall cabinets, etc (The Daily Star, 8 June
2010).
OTOBI has a separate HR department. The company has a HR manager who is responsible for
handling the all the employees in the HR department. The companys exclusive products are
made by the talented employees. These employees are recruited by the HR department. The
companys HR department is responsible to provide effective training to the employees. The
company has both the internal and external recruitment system. They recruit employees
externally through newspaper ads and BD jobs. For the external recruitment, they use email,
notice boards, etc. They try to follow the fair recruitment process through which more skilled and
creative employees can be hired (Source: Interview from the HR Manager).
The companys Job analysis is revised in every year. Also, they update the organ gram of the
company. However, OTOBI conducts different training and development programmes for its
employees. The employees acquire different skills and knowledge through these training
programmes. They use different training methods like lectures, presentation slides, role play, case
study, etc. Also, they have training for office manners and basic communications (Source:
Interview from the HR Manager).
OTOBI also has performance appraisal system for its employees. The performance appraisal is
conducted in one year. Through the effective performance appraisal system, the company can

11

understand in which area the employees need training. Employees technical abilities can be
improved after appraising their performances (Source: Interview from the HR Manager).
The company has an attractive compensation and benefits for its employees. For the attractive
compensation package, most of the qualified and creative employees work in the company.
These employees are responsible for delivering the high quality products to its customers. Also,
the company has different facilities for its employees like medical insurance, festival bonus,
gratuity, provident fund, transportation, subsidized lunch, etc. For these all facilities, employees
are more motivated to work in OTOBI
(Source: Interview from the HR Manager).
Features
Year of Establishment
Total Workforce
Total Number of Outlets
Market Share in Branded Furniture
Total Export to Foreign Country
% of Employee Retention Rate
Companys Growth Rate in %
Total Market Share in the Furniture Industry
Total number of dealers in Bangladesh and India
Name of the countries exported OTOBI products

Figure
1975
5000
415
80%
15%
10%
60%
35%
415+28= 443
India, UK,

Pakistan,

Italy,

US,

Germany, etc
16

Number of Showrooms
Summary Table of OTOBI
Source: (Chowdhury & Hasan, 2010).

From the table above, the overview of the company can be observed. OTOBI established in 1975
with its total workforce of 5000 employees. The company has 415 outlets in all over the world.
OTOBI also has 80% market share in the branded furniture. The company is also successful to
export in the foreign countries. Companys total export of products to the foreign country is 15%.
OTOBIs employee retention rate is around 10%. The company has achieved the growth rate of
60% with its high class and exclusive furniture. OTOBIs total market share in the furniture
industry is 35%. It has total 443 numbers of dealers in India and Bangladesh. Also, it has 16
showrooms in all over the world (Chowdhury & Hasan, 2010).

12

MISSION OF OTOBI:

To dominate Asia-Pacific by 2020 (Otobi )

To provide the middle class and higher middle class people of the country world
class furniture in a very

comfortable price

September 2012).

VISION OF OTOBI:

To become a major global

Strategies
usually
implemente
d by OTOBI

brand (Otobi )

COMPANY SLOGAN OF OTOBI:

Keep Reinventing (Otobi )

Corporate
Level
Strategie
s

Business
Level
Strategie
s

Marketin
g
Level
Strategie

13

Productio
n Level
Strategie
s

(Soykot,

BUSINESS LEVEL STRATEGY OF OTOBI:

OTOBI has created its own position in the current furniture business in Bangladesh through
implementing a differentiated business level strategy based on simultaneous changes in the
production techniques by following a flexible manufacturing system. OTOBI is producing its
products at a low cost as they are producing necessary tools by their own rather than buying
them from other sources which are necessary to manufacture furniture to meet the expected
profit margin . During developing a differentiated business strategy, OTOBI also to emphasize
on economies of scale by standardizing various of the parts used in the final product. OTOBI has
the strategy of grabbing the expected customer market by offering striking packages of options
from which consumers can choose his or her desired goods. Finally, OTOBI s business strategy
can be termed as a cost effective and differentiation strategy since they have been able to meet
the perceived value of their finished goods. (Sources of Competitive Advantages of OTOBI
Limited, November 8, 2012)

CORPORATE LEVEL STRATEGY IMPLEMENTED BY OTOBI:

OTOBI has developed its corporate level strategy of concentrating on just a single business of
laminated furniture business. All of the managerial, financial, technical, and physical resources
and capabilities of OTOBI are focused on competing in a single business area which is the
furniture business. OTOBI always sticks into focusing on only the furniture business not to
diversified business even having the chance of diversification because they know that their
resources as well as manufacturing process have regained the expertise only on the furniture
business. Main focus of the corporate level strategy of OTOBI is not to diversify its business into

14

different business areas where their resources and capabilities have little value hence earning a
huge amount of profit concentrating only on the furniture business. (Sajjad, 2012)

MARKETING STRATEGIES FOLLOWED BY OTOBI:

From the very beginning, OTOBI has been using its own marketing strategies to attract
customers which include Direct Selling, Banner, Paper Ad, TV Ad and People also. A short
description of each promotional strategy used by OTOBI has been described below:

Direct Selling:
Under direct selling, OTOBI is using some of their marketing executives who are used to go to
the big corporate houses with their leaflets and other promotional tools to motivate them to
purchase furniture of OTOBI which is actually marketing significance of OTOBI as a specific
brand (Soykot, September 2012)

Banner:
OTOBI is using banners to represent their various promotional strategies including various sales
offers, discount offers in various seasons to make customers known to OTOBIs different sales
offers. (Soykot, September 2012)

Paper AD & TV AD:

OTOBI also uses print media as well as TV commercials to represent their prestigious dignity of
OTOBI. Through promotional campaigns OTOBI is attracting a huge segment of customers to
buy their collections. An example of OTOBIs TV commercial is an AD with a line Apni
Kinchen Kobe? to motivate people to buy OTOBI products motivated by others. (Soykot,
September 2012)

PRODUCTION STRATEGY USED BY OTOBI:

15

OTOBI LIMITED is using a sophisticated strategy from collecting raw materials to preaparing
the final products to be reached at the end users hand. They use Process planning that carry the
minimum cost of producing and processing goods, Capacity Planning that ensure effective uses
of available resources and minimize resource wastage, Master Production Scheduling so that no
employees sit idle and skilled workers are used in the best possible way, Quality Control
Planning the ensures the highest quality in the lowest production cost, Forecasts on yearly
capacity and targeted goal, Sophisticated Material Planning of producing some of the necessary
component parts of furniture production to minimize the production cost, Shop floor planning
and housekeeping, Order based production follow up so that no extra storage cost occurs or
products are wasted. All of these production strategies are processed, administered and
supervised on a weekly basis. (Hossain)

RECRUITMENT AND SELECTION PRACTICES

The recruitment process in OTOBI starts whenever a requisition is being raised. The concerning
department informs the human resources department through electronic mail or through prior
approvals from the department heads. Once the human resources department is aware of the
recruitment, then the job description for the mentioned position will be collected. From the job
description, main duties and responsibilities will be separated in order to produce an
advertisement (if required) to be sent to BDJobs.com. Usually, there is a pre defined format for
sending job advertisement to BDJobs or at any newspaper which is being followed.

16


Performance Appraisal;
Appraisal; Exit
Ethics
Ethics Justice
Justice and
and Fair
Fair TreatmentTreatment- Performance
Exit
Interview
Interview

Factory workforce;
workforce; Sales
Labour
Labour RelationRelation- Factory
Sales force;
force; management
management staffs
staffs

Work environment;
environment; Factory
Factory hygience
hygience
Employee
Employee Health
Health &
& SafetySafety- Work

Startegic
Startegic Pay
Pay PlanPlan- Consultant
Consultant Group
Group
Pay
Action KPI
Pay for
for PerformancePerformance- Action
KPI and
and weightage;
weightage;
Benefits and
2 Festival
Benefits
and ServicesServices- 2
Festival bonus;
bonus; Medical
Medical Insurance;
Insurance;
Transport
Facility;
Maternity
Leave
Transport Facility; Maternity Leave

Employee Relations
Compensation and Benefit
Training and Develoepment
Recruitment and Placement

Organization
Organization Training
Training &
& DevelopmentDevelopment- In-house
In-house and
and Outdoor
Outdoor
training
training

Performance
Appraisal
ManagementAction
Plan
Performance Appraisal Management- Action Plan KPI
KPI and
and
weightage;
Training list
weightage; Training
list

Career
Career CoachingCoaching- HR
HR Consultants
Consultants

Job AnalysisDescription; Person

Person Specification
Specification
Job
Analysis- Job
Job Description;

Place Job
Job
Recruitment
Recruitment &
& SelectionSelection- Raise
Raise requisition;
requisition; Place
Advertisement;
Advertisement; Collect
Collect CVs
CVs

Employee
Testing
&
SelectingShortlisting
CV;
Conduct
exam/
Employee Testing & Selecting- Shortlisting CV; Conduct exam/
assesment
assesment

Inetrview
Interview
Interview CandidateCandidate- Initial
Initial &
& Final
Final Inetrview

The advertisement remains at the BDJobs website for around a month and the applicants are
welcomed to apply online. During this period of time, CVs which match the criteria in terms of
educational qualification, experience, age and also in expected salary are shortlisted. The criteria
for short listing candidates may vary from positions to positions. Beside posting advertisements
at online websites, internal circulations are also made in OTOBI. Internal circulations are usually
done through electronic mail to employees and through notice board communications. Next an
initial interview is conducted to screen out the candidates in terms communication skill,
appearance. Then written exam is taken if it is required for the position. If not, then another
phase of interview is taken. In case of some special positions, day long assessment is conducted
and following that the final interview is taken.

Raise
requsition

Place job
advertisemen
t

Shortlisting
initially from
CV screening
and interview

Final
Interview

Conduct
Assesment
centre test (if
recruting
designer)

Conduct
Written Exam

Recruitment and Selection process at OTOBI

17

(Source: Interview with Chief HRM Officer, BD)

PROMOTION PRACTICES
OTOBI has 415 outlets all across Bangladesh and each of these outlets are supported by a huge
sales team. A great number of Sales Executives are present in these outlets and they are working
based on commission. OTOBI provides incentive quarterly but disburses the amount to the
employees once in a year. This incentive encourages the employees to active participate in the
companys sales and they become highly motivated to perform and greater sales for OTOBI.

(Source: Interview with Chief HRM Officer, BD)

TRAINING AND DEVELOPMENT PRACTICES

At OTOBI, few of the trainings are conducted on a regular basis which every employee receives
from the human resources department. Trainings are mostly:

Basic English Communication

Office Manners and Etiquette

Other than these trainings, all employees go through a Training Need Assessment at OTOBI.
They mention some of their desired trainings in their performance appraisal forms and human
resource department arranges the training for the employees. Both internal and external trainings
are provided to the employees of OTOBI. The company follows different training methods like
lectures, presentation slides, role play, case studies, video presentations etc. Through these
effective training methods, the employees can gain knowledge and skills. Also, they have special
training for the sales force of OTOBI. Through these training, the employees of sales department
can learn about sales techniques and retail operations.
(Source: Interview with Chief HRM Officer, BD)

PERFORMANCE APPRAISAL AND MANAGEMENT PRACTICES

18

At OTOBI, performance appraisal is conducted once in a year. This appraisal is usually

conducted during May/ June time of the month and it becomes effective from the first of July. In
the performance management and appraisal process, a form is used. In the form, each action has
KPI with a weight age and is measured by the supervisor. The KPI in the performance appraisal
form varies from position to position and also the target is different for each employee. This KPI
is being predetermined at the beginning of the year by the supervisor and the employee so that
the target and the task is achievable and as well as realistic. At the end of the period, the
supervisor

and the employee sits with the previously set performance appraisal form and

measures each criteria based on the performance that the employee has provided all through the
timeline. Also the performance appraisal form has separate sections to record the trainings that
the employee has received throughout the year and another section is kept for determining the
future trainings that the employee is willing to take.

(Source: Interview with Chief HRM Officer, BD)

COMPENSATION, BENEFITS AND PAY STRATEGIES

At OTOBI, they are following a predetermined set of pay strategy for all employees. They have a
cluster of permanent and contractual employees, considering the management, sales and factory
workers who receive their salary as per management decision at the end of each month. They
have designed their pay plan from a consulting group and have established that pay plan at
OTOBI. This pay plan is also revised to adjust with current furniture industry practices.
Gradually the employees receive their salary at the end of the month. Beside regular pay,
employees receive several benefits which are mentioned below:

2 festival bonuses (equivalent to basic)

Medical insurance- Aligned with different hospitals
Transport facility for all employees
Maternity leave benefit
Provident Fund- 10% of basic
Gratuity- matures in 3 years

(Source: Interview with Chief HRM Officer, BD)

19

LEAVES AND WORKING HOURS

OTOBI has 10 casual, 14 sick and 30 days annual leaves for its employees. Also the company
has maternity leaves for its female employees. The duration of maternity leave is a paid leave for
a tenure of 4 months. However, the working hours of the employees are from 9 am to 6.30 pm.

Casual Leave- 10 days

Sick Leave- 14 days
Annual Leave- 30 days

(Source: Interview with Chief HRM Officer, BD)

ETHICS, JUSTICE AND FAIR TREATMENT

OTOBI practices fair procedures in performing their analysis for their appraisal. Also in terms of
evaluating a resigning employee OTOBI makes sure that the employee receives proper judgment
from the management team. When an employee decides to resign, the HR sends out a clearance
from followed by an EXIT interview where the management tries to find out why the employee
has decided to leave. The EXIT interview is performed by maintaining absolute confidentiality
and privacy so that the employee is reassured about his/her said information being kept and
judged fairly and ethically by the management team.

(Source: Interview with Chief HRM Officer, BD)

LABOR RELATION PRACTICES

OTOBI has three factories in which they process all their furniture products and has an extensive
wide range of outlets all throughout the country which helps OTOBI to reach his final
20

consumers. At the factory, they are around three thousand employees and around one thousand
employees of sales executives who monitor and create demands for OTOBIs furniture to be
customized. Moreover, there is also a team to provide after sales services which mainly includes
fixing the furniture at the consumers point and other necessary facilities. Overall these
employees of several different teams are representing the workforce of OTOBI. Besides
considering the management team which includes different departments like Administration,
Human Resources, Finance, Commerce, and Commercial and so on are all included to sum up
the workforce team of OTOBI. In terms of labor practices, OTOBI mainly follows and maintains
the labor relation policies and procedures being advised by the government of Bangladesh.

(Source: Interview with Chief HRM Officer, BD)

UNIQUE HRM STRATEGY:

One of the remarkable and unique HRM strategies that OTOBI has implemented is their strict
implementation and monitoring of EXIT interview. When an employee decides to resign, the HR
sends out a clearance from followed by an EXIT interview where the management tries to find
out why the employee has decided to leave. The EXIT interview is performed by maintaining
absolute confidentiality and privacy so that the employee is reassured about his/her said
information being kept and judged fairly and ethically by the management team. Many of the
companies have this EXIT interview, however not being maintained regularly. IN case of
OTOBI, they strictly make sure that every resigning employee meets the Human Resources
department at least once before they finally leave OTOBI. Due to this management gets to know
about the exact reasons for the employees to leave and track back whether they are leaving due
to supervisory issues or whether there are better industry practices which are attracting them for
better opportunities.

OTOBI gives many incentives other than their regular salary package. Performance Base
incentive is most common among them. They frequently intensify their employee according to
their performance in the last year. OTOBI provides transportation facility to their employees as
it becomes very difficult to use public transport now days. OTOBI employees can safely reach to
21

their office with their office transport. It also helps OTOBI to get a disciplined work force.
Because all employees will be reaching office on time and will try to finish work on time to get
the office shuttle.

SUCCESS STORY OF OTOBI:

OTOBI has been successfully operating in the furniture industry for merely 35 years. OTOBI is
moving toward to rising to the ranks of Asias top three brands by 2020 through providing
holistic space solutions catering to all spheres of daily life.
OTOBIs success story is represented below based on the years in the best possible way:

Success
Story of
OTOBI

FY 1998
FY 20072008
FY 20092010
FY 20112012
FY 1998: OTOBI expanded its business outside Dhaka by opening its first exclusive dealer in
Chittagong and started manufacturing completely knockdown panel furniture and in the same
year OTOBI won the 1st Prize for Pavilion in the Dhaka International Trade Fair. (Bangladesh
Brand Forum, 2012)
22

FY 2007-2008: OTOBI has reached to a double-digit growth rate with an average of over 20%
by taking two major steps which are- 1)As a Bangladeshi first global company, OTOBI expanded
its business in seven cities in India through distributors and dealers, strengthening it position in
2007 and 2) OTOBI attracted young customers by launching the vibrant LA-Foring Istishan in
2008 . In 2008 they gained government hospitals as well as private clinics in their buyer list for
hospital furniture. (Bangladesh Brand Forum, 2012)
OTOBI made sales of 200 crores in 2001 and 250 crores in 2008 which were the highest amount
of sales made by a furniture company in Banglades in these two years. In 2008 OTOBIs growth
was 25%, Partex- 18%, Navana-12%, Hatil-16% and Akhter 28%. (Bangladesh Brand Forum,
2012)
FY 2009-2010:

In 2009, OTOBI achieved the award of Superbrand of Bangladesh by

Superbrand UK. And launched an innovative range of contemporary office furniture and
complete interior solution for any space, named Notepad. (Bangladesh Brand Forum, 2012)
In 2009 OTOBI earned profit around tk 4700000 which made the growth rate of OTOBI 40%,
where growth rates of others are: Partex- 28%, Navana-16%, Hatil-20%, Akhter-35%.
(Bangladesh Brand Forum, 2012)
In the year 2010 OTOBI attracted around 2,79.455 visitors in their stall by introducing 33 new
products which made OTOBI to receive orders worth TK 7.92 crores. In 2010, OTOBI gained
60% of the market share in the furniture industry. (Bangladesh Brand Forum, 2012)
In the same year, OTOBI started using SAP which has been still working as a success factor of
OTOBOI.
FY 2011-2012: OTOBI entered in a new market segment through introducing 'Apartment
Concept' for the first time in Bangladesh and present four major lines of products in the marketRoyal, Exotic, Heritage and Contemporary.

(Bangladesh Brand Forum, 2012)

23

OTOBI has a separate HR department. The company has a HR manager who is responsible for
handling the all the employees in the HR department. The companys exclusive products are
made by the talented employees. These employees are recruited by the HR department. The
companys HR department is responsible to provide effective training to the employees. The
company has both the internal and external recruitment system. They recruit employees
externally through newspaper ads and BD jobs. For the external recruitment, they use email,
notice boards, etc. They try to follow the fair recruitment process through which more skilled and
creative employees can be hired (Source: Interview from the HR Manager).

The companys Job analysis is revised in every year. Also, they update the organ gram of the
company. However, OTOBI conducts different training and development programs for its
employees. The employees acquire different skills and knowledge through these training
programs. They use different training methods like lectures, presentation slides, role play, case
study, etc. Also, they have training for office manners and basic communications (Source:
Interview from the HR Manager).

OTOBI also has performance appraisal system for its employees. The performance appraisal is
conducted in one year. Through the effective performance appraisal system, the company can
understand in which area the employees need training. Employees technical abilities can be
improved after appraising their performances (Source: Interview from the HR Manager).
The company has an attractive compensation and benefits for its employees. For the attractive
compensation package, most of the qualified and creative employees work in the company.
These employees are responsible for delivering the high quality products to its customers. Also,
the company has different facilities for its employees like medical insurance, festival bonus,
gratuity, provident fund, transportation, subsidized lunch, etc. For these all facilities, employees
are more motivated to work in OTOBI (Source: Interview from the HR Manager).

24

INTERVIEW INFORMATION
STRENGTH:

Skilled Workforce: OTOBI possesses a skilled and efficient work force. While shifting its
manufacturing plant from Mirpur to Shyampur it took all of its skilled work force along
with it.

Dynamic Leadership: The founder of OTOBI, Mr. NitunKundu, is a dynamic person with
lot of innovative skills. He is a famous architecture of our country. As Managing Director,
he has lead OTOBI to establish itself to be a world class furniture manufacturer.

Well Facilitated Production Site: Initially the production site of OTOBI was located at
Mirpur which day by day became overcrowded. Thats why OTOBI had to shift some of
its production facilities to Shyampur, located beside Dhaka-Narayangang highway. There
by

they

could

also

avoid

burden

of

municipal

tax

and

other

costs.

Good Marketing Force: The marketing department of OTOBI is composed of good

number of skilled marketers. The brochures published by this department can not but
attract

every

cultured

person.

R & D: There is an R& D section in OTOBI which is guided by the MD himself. As the
Managing Director of OTOBI is very innovative he keeps himself involve in R&D as
well

as

encourages

his

employees

for

even

small

innovation.

WEAKNESSES:

Failure to Follow JIT: One of the main components of OTOBIs product is imported from
Malaysia, Thailand and Singapore. Due to political unrest OTOBI keep huge buffer stock
25

to meet contingencies. Which makes it unable it to follow JIT. Some times this stock
becomes so large that OTOBI has to stop its further selling, and disposes the raw material
first.

Price of OTOBI Product: For the general people of Bangladesh price of the OTOBI
product seems to be little high in comparison to other wood made furniture, which
restricts

it

to

get

large

customer

group.

OPPORTUNITIES:

Growing Market Share: Starting from the small corner of the kitchen of a home maker up
to the luxurious work stations of the top executives, OTOBI has successfully established
foothold

through

its

various

type

of

furniture.

Changing Culture: With the change in culture and fashion, people are looking for stylist,
well designed furniture for their houses, offices and shops. This opens a broad market
opportunity

for

OTOBI.

Growing Concern on Forestation: Every year large portion of forest have been wiped off
by the wood- businessmen for preparing the wooden furniture, which has a devastating
effect on the environment of our country. Now people have become more conscious
about forestation, they have started looking for furniture made of other substitute
materials as OTOBI offers.

THREATS:

New Competitors: Recently in our country a good number of firms are coming up with
their innovative and competitive furniture like Partex, Tanin, AkizPartex. There is also
some foreign furniture being imported which becomes threat to OTOBI products.

Restriction on Use of Plastic: Recently government has imposed restriction in use of

polythene bag due to its detrimental effect on the environment. Government is also
thinking to impose restriction on other plastic materials subsequently. As OTOBI is using
26

a good amount of plastic material to produce its product therefore this restriction may
become

threat

to

OTOBI.

Use of Rot Iron: Use of rot iron as furniture is also becoming popular day by day with the
change of culture and fashion. It is also becoming a threat to OTOBI.

Political Unrest: Political unrest is a normal phenomenon in our country. Supply of raw
materials and production schedule often gets stuck up due to strike and other political
unrest. Thus it hinders the activities of OTOBI like all other industries.

COMPANY GROWTH ANALYSIS:

In 1984-85 Mirpur factory building was constructed. All kind of metal furnitures were being
manufactured at Mirpur factory and marketed through the show room at Elephant road by 1988.
The quality of OTOBI products as well as sales and marketing methods was so successful that by
1992 Mr. NitunKundu constructed a four storied building at Dilkusha C/A and opened a display
center on October 1993. OTOBI set up another factory at Shyampur with continuous market
demand, which went into experimental production in 1994. The factory is now fully operational
with latest machines to manufacture a wide range of most sophisticated furniture so that it can
compete in the international market.

CONCLUSION AND FUTURE DIRECTION OF OTOBI

OTOBI is the market leader which has been practicing Human Resource differently than other
local companies. It has brought HR Practices to a different level. Most of the Bangladeshi firm
now a days includes family member in organization. But OTOBI has always been managed by
paid Executive Directors who actually gave direction from their experience.
Other companies actually follow OTOBI in designing their business ideas. However Human
Resource in OTOBI is much more unique than other company. Other local companies have many
Human Resource Practices to learn from OTOBI. It practices Human Resource in automated
way. Concerned Department only addresses need of any new recruitment. Following automated
program Human Resource Department conducts the whole process. As mentioned earlier, the
27

company used managed by the late Chairman Nitun Kundu, after his departure, paid CEO took
over the control. After that, whole Human Resource Process has become confined and unbiased.
Their recruitment is as fair as any multinational company operating across the nation. They have
introduced performance measurement tools; balanced scorecards brought changes in Human
Resource Practices overnight. On top of that, Implementation of the massive enterprise resource
planning system from SAP brought effective resource management in the company. Other than
adding basic features in Human Resource Department, they have also implemented values of
innovation discipline, team building which becomes one of their competitive advantage in recent
years.
Bangladesh furniture industry is depended on small cottages. In recent few years furniture
industries were transformed from the cottage based to the manufacturing industries in
Bangladesh. Different categories of furniture were made from melamine board, processed wood,
particleboard, etc. In recent time, Bangladesh has become popular in making a wide variety of
good quality and international standard furniture. Local furniture demand is now even more than
foreign furniture. In 1995, Bangladesh started to export its furniture to foreign countries. OTOBI
was leading the export assignments. (The Daily Star, 2014).
Retaining employees is one of key Challenges that organization faces today. Employee retention
rate is significantly higher in OTOBI. They focus on Employees self-development. Basic English
Communication, Office Manners and Etiquette are part of all training program. Over 15000
employee is serving OTOBI for years and Employee Turnover rate is very low. Other Local
companies can follow many of OTOBIs culture to make their Human Resource System
effective.

28

ROLE MODEL OTOBI:

Role Model
OTOBI

Incentive

Exit Interview

Transport

As many of the employees are cottage based their HR issues are dynamic. OTOBI HR has to
deal with both white and blue collar employee. They give highest incentive other than salary in
the industry. According to our interview, factors in OTOBI Human Resource which other
company can follow are below mentioned.
INCENTIVE:
OTOBI gives many incentives other than their regular salary package. Performance Base
incentive is most common among them. They frequently intensify their employee according to
their performance in the last year.

EXIT INTERVIEW:
Though many company practices it, but OTOBI religiously follows Exit interview before issuing
any clearance letter. They want to see the gap in their reporting managers so that they can
change it after any employees departure.

TRANSPORT
OTOBI provides transportation facility to their employees as it becomes very difficult to use
public transport now days. OTOBI employees can safely reach to their office with their office
transport. It also helps OTOBI to get a disciplined work force. Because all employees will be
reaching office on time and will try to finish work on time to get the office shuttle.
29

FUTURE DIRECTION
In Near future, OTOBI will be changing their appraisal system. Though current appraisal system
is serving company pretty well, but further modification and automation will make it more
effective. Assessor can see track record of his employee by a simple click. This system will also
contain all sort of recognition and achievement that employee has been entitled in his career.
Below items should be incorporated in future Human Resource Planning.

Benefit and Services

Future
Direction

HR Automation

In house Training Team

Cafeteria Management

BENEFITS AND SERVICES

Other than Out Patient Department OTOBI should be affiliated with large hospital allow their
employee to avail discount on Hospitalization. They can also ensure that there employee gets
cash free service. Which is employee can avail service in free of cost as long as his or her
insurance covers. Rest of the part hospital can charge. This helps employee to walk out of
hospital after the service spending absolutely no cash.

HR AUTOMATION
Though current appraisal system is serving company pretty well, but further modification and
automation will make it more effective. Employee data base should be maintained in separate
30

automated system. HR should be able to check employees data within few clicks. This basically
means resource automation. Human Resource Management basically deals with companys most
valuable resource. Automation can give best result as Human Resource Department can easily
track down its entire employee base whenever they need.

IN HOUSE TRAINING TEAM

Currently BD Jobs conducts all OTOBIs Training which is very expensive. They should
introduce in house training to make it more cost effective and customized. In house training
team can give better customized service at reduced cost. In house training will be conducted by
employees. As employees are the inner stakeholder of the company, they can provide better
performance than any renowned training firm in the country. Human Resource Department will
be more vibrant and exclusive if OTOBI can implement in House training team to train their
employees. It can also maintain a track of employees who are availing training and also ensure
every employee gets tailored focus. This may not be possible for external training team. So
OTOBI must have structured in house training team.

CAFETERIA MANAGEMENT SYSTEM

Employee should be given list of benefit system from where they can select. Among these
benefits, the employees choose benefits that they want over a given period of time. This system
is called Cafeteria Management System which is very common in western world. OTOBI can
start practicing it to become the market leader. Initially they can start with limited group as a
pilot project. If it becomes successful they can launch it officially. Mostly high officials can take
this system as an effective medium. High officials always want their benefit customized.
Cafeteria management system will enable them to receive their salary in their own way. They can
even come up with innovative suggestions that might help the entire Human resource
department.

31

DISCUSSION QUESTIONS
1) What items are typically included in the job description of the employees of OTOBI?
2) What are the criteria you set for the job specification of the employees of OTOBI?
3) What are the methods you follow for the selection interviews of the employees of
OTOBI?
4) How do you conduct the structural interviews of the employees of OTOBI?
5) For what sorts of job do you think written tests are most appropriate?
6) What are some typical on-the-job training techniques of OTOBI?
7) Do you have any job rotation programs for the employees of OTOBI?
8) Do you conduct the on-the-job and off-the-job training of the employees of OTOBI?
9) How do you orient the new employees of OTOBI?
10) How do you conduct the performance appraisal process for the employees of OTOBI?
11) How performance appraisal process is useful in identifying need assessment of the

12)
13)
14)
15)

employees of OTOBI?
Do you have performance based pay system for the employees of OTOBI?
Do you have proper incentives for the employees of OTOBI?
How do you maintain ethics, and fair treatment of the employees of OTOBI?
How can you maintain the security and the privacy of the employees of OTOBI?

QUESTIONNAIRE
1)
2)
3)
4)
5)
6)
7)
8)
9)

How do you manage and motivate the employees of OTOBI?

What are the strengths and weaknesses of OTOBI?
What are the overall HRM practices of OTOBI?
What are the mission and vision of OTOBI?
What marketing strategies you follow for the product development of OTOBI?
Explain how HRM contributes to maintain the overall process of OTOBI?
What are the working hours of OTOBI?
How do you conduct the job analysis of OTOBI?
What are the methods you follow for the job descriptions and job specifications of

OTOBI?
10) What are the steps you follow to recruit your employees?
11) What are the particular skills and abilities your company wants in candidates for the entry
level jobs?
12) What are the interview techniques you follow during the recruitment process of OTOBI?
13) How do you maintain reliability and validity in terms of employee testing?
14) What are the challenges you face to make effective recruiting?
32

15) Do you carry out any exit interviews?

16) How do you design the training and development programme for OTOBI?
17) What are the topics you focus on the training programme?
18) How do you conduct the need assessment of your employees?
19) What performance appraisal techniques you follow for your employees?
20) What are the steps taken by OTOBI if the employees actual performance is not beyond
the standard?
21) What is the usual time gap between each performance appraisal?
22) What are the pay strategy practices of OTOBI?
23) What types of benefits and incentives you offer to your employees?
24) Does OTOBI provide employees career security and employee privacy?
25) Does OTOBI provide any life insurance policy to its employees?
26) Does OTOBI provide retirement facilities to its employees?
27) Does OTOBI provide medical facilities to its employees?
28) Does OTOBI provide any consultancy facilities to its employees during their stress or
tough time?
29) How many medical and casual leaves your employees get in a year?
30) Does OTOBI provide maternity leaves and day care center facilities to its female
employees?
31) What are the human resource management policies and strategies of OTOBI?
32) What HRM policies are used while considering employee promotions?
33) What are the major strengths and weaknesses of your HR policies?
34) What can be done to improve the HRM policy of OTOBI?
35) Do you think your HRM practices are fine tuned with the organizational goals and
strategies?
36) What are the labor relations practices of OTOBI?
37) What unique strategies do you have which differentiate you from the competitors?
38) What are the finance and production strategies of your OTOBI?
39) How the HR policies do are matched with the finance and marketing strategies?
40) How do you promote your products?
41) What types of labor and employment laws you follow for OTOBI?
42) Does OTOBI maintain ethical behavior at work?
43) How do you ensure equal opportunity in OTOBI?

33

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36