Global Standards versus Nationally Unique HRM Policies for HSBC Bank

1 Globally Standard versus Nationally Unique HRM Policies for HSBC Bank Introduction With the increased market competition that has been witnessed in virtually all businesses in the world, there has been the growing need for businesses entities and enterprises to explore international markets as a way of expanding their markets. With technological advances being witnessed on an almost daily basis, it has been easier for organizations to manage their global subsidiaries from their headquarter offices while ensuring operations run smoothly in those farflanged branches. One such global organization is the giant Hong Kong based HSBC Bank which has currently over 600 offices and 20 international branches that spans across the AsiaPacific region alone. This paper seeks to explore in detail whether it would be prudent for the bank to pursue globally uniform standards for its human resource practices, or whether they can apply different and unique set of policies for each countries.

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2 The benefits of employing standard HRM policies across the world Employing a standard policy across board would present an opportunity to all workers, be they in China or Singapore, to understand clearly what policies to expect in their service to the bank. An international human resource policy might be fashioned according to HSBC’s home country standards and general policies on recruiting workers, their compensation, development and training, as well as separation from the company. As such, these standards might differ with the ones that exist in a host country, for instance say Taiwan, or South Korea. Workers being recruited in these host nations to work in the subsidiaries might really not be well conversant with what the bank’s policies stipulate in particular. However, the fact that these policies are standardized will make it easier for them to know what to expect from their employer. In other words, a standardized HR policy means whatever is happening in one country is replicated in all the others. With the internet integration that has brought about globalization, a worker in one country can read from the bank’s website stories and accounts of other workers in different countries and know exactly what is needed of him, as well as what he or she should expect from the employers. Such a worker is well conversant with his rights as an employee of the bank and cannot be unfairly mistreated by his superiors at the bank (Tan, 2009).

With a standardized personnel policy, the bank’s training of newly recruited staff across the world will generally be easier. The same requirement and knowledge that is expected in Hong Kong for the bank’s staff is similar to what will be expected in China, or Japan, or South Korea. The bank has already established the necessary training needs for its global workers and has even documented these needs on their official website. It therefore becomes easier for workers to read and understand exactly what is required of them. Thus, during worker’s training sessions, especially for the newly acquired staff, not too much time and resources is required to

3 try and make the workers understand. In instances where a particular subsidiary has a problem with its general training, it becomes easier to dispatch an expatriate to assist in the training.

These expatriates already know what the training is all about because they were previously undertaking the same responsibilities in their countries and therefore will go on with the new responsibilities smoothly (Batt, Holman & Holtgrewe, 2009).

In cases where the bank’s central human resource department needs to make changes on its training methodologies and requirements, it will introduce the new changes easily without having to reprint new training handbooks for dispatch to the hundreds of thousands of workers spread across different countries. With the benefit of technology, and particularly the internet, all the HR function stationed at the headquarters needs to do is introduce the changes on the company’s official website. These changes will be fast to implement because all the subsidiaries of the bank will be able to see the changes and adjust accordingly. It will thus save a lot of time which would have otherwise been wasted in customizing the change to suit every country’s unique situation and culture. Additionally, the costs of introducing such changes also remain very minimal. If, for instance, the bank was adopting a unique human resource policy for all the different countries it operates in, then changes in the policies would require experts to fashion them in a unique manner for all the countries. That would have been time consuming and costly as well.

Standard policies for personnel across the world means HSBC Bank customers can have a particular expectation in the way they should be handled by the bank workers. Bank customers who often travel a great deal will know whether a worker of the bank, even if it is in a foreign country he is visiting, has treated him rightly or has given him a raw deal. These customers can consequently raise their complaint or grievances with the bank’s management for punitive action

4 to be taken to the offending staff. In the contemporary business world where competition has literally moved to the next level, businesses cannot afford to mistreat their customers, particularly when rivals are pursuing and convincing the same customer to shift their allegiance towards them. Thus, a globally standardized HR policy and practice, in a way, gives the customers power to inspect the services that are being offered to them. Where direct personal services are below par, the customers can tell and actually raise complaints with the management.

The uniform policy that applies across all the bank’s branches and subsidies makes it easy to manage the entire HSBC institution. The practices are common in all the countries and therefore management has easy time controlling and coordinating activities as well as performance. Expatriates can be moved to any country to work from there without having the trouble of trying to learn and understand how the new system operates. For the expatriates, recording good results will also be achievable because their long term experience can still be applied in any country and it will still produce good results. Training expatriates every time they have been assigned a new station is an expensive venture which can effectively be avoided by adopting this standardized practice.

The benefits of adopting country-unique HRM policies Personnel policies, particularly for global companies like HSBC Bank, can work out well if they are specially formulated to suit individual countries. This is because all the countries in the world have got their own unique cultures, beliefs, and ways of doing things. Expecting the people in China to conform to the culture and behavior of people in Hong Kong for instance, can prove to be difficult. The workers will obviously resist some policies from being implemented or working out smoothly, particularly if they feel such policies are alien. Global companies must

5 therefore take the responsibility of studying the nature and general way of doing things in all the countries in which they have opened up branches and subsidiaries, and then customize policies that will particularly be best for these countries. A good example to consider is the technological and general advancement levels for countries in the world. Even the education systems in countries are not the same and therefore expecting that all workers should have a minimum qualification in their education can hardly be achievable. It will mean that countries with less developed systems of education will acquire weak candidates whose competitive advantage will be a let down to the company’s performance.

Different countries also experience different situations at any given time. Some countries could be undergoing difficult economic times which could effectively mean they cannot raise enough money to pay workers as per the minimum requirements of the entire bank. Other countries could be experiencing turmoil at a given time, and thus could be experiencing difficulties with locating workers with better qualifications to meet their employment standards.

Such scenarios call for a customization of policies to help the subsidiary located in this country to manage its unique condition and situation effectively. In such an instance forcing the subsidiary to follow a standardized policy could further plunge the subsidiary into jeopardy.

When it becomes to training workers in a differentiated human resource function, the resultant training module and guide is more accurate to the unique challenges facing the country and the performance of the bank’s subsidiary. Unlike in a standardized training where the human resource experts in the training and development draw up a uniform training requirement that might not really reflect on a country’s unique needs, a decentralized personnel function will have its human resource experts study the accurate details of a country’s external environment and come up with a fine training guide that is accurately responsive. Thus, the fully trained workers

6 will be more competent because their credentials will be of a higher quality. On the other hand, the country subsidiary will perform excellently well because of being staffed with a workforce that has truly mastered their roles and obligations.

The external environment within which businesses operate often is too dynamic and would require that business entities operating in such environments be flexible enough in adopting new changes to the environment. As such, a human resource function that is differentiated with unique operations for each country has a higher likelihood of producing better results for global firms like HSBC. For instance, a change in the working environment, such as heightened competition from other rival banks, might require that training requirements also be adjusted in order to enable workers to compete effectively with the rival firm. In such a case, the localized human resource department function will introduce new and specific changes to their training and development methods so as to fully empower the employees. In other words, localized human resource policies are more flexible and can be adjusted at any given time to conform to unique situations unlike in standardized policies where such authority can only be issued by the headquarters (Elizabeth et al, 2007).

HSBC bank will manage to maintain a close relation with its entire workforce if it pursued a differentiated or localized human resource policy, more than would be the case if it settled for a standardized personnel policy. Employees in all the countries where HSBC bank has subsidiaries face specific challenges and scenarios and which cannot simply be assumed to be uniform and therefore offer a generalized policy while assuming that it would be successful. A local human resource function will look at all the common challenges that workers face in their daily operations and will in turn come up with policies that intend to make the working environment for the workers more palatable. This will make the workers more cooperative with

7 their seniors and will see them give positive contributions towards the running of the bank. A standardized personnel policy lacks that local touch because its details are drawn up in a different country where the local needs of the workers are sometimes simply overlooked.

Conclusion Standardized human resource policies for global firms like the HSBC bank are often drawn up in the headquarters and give little considerations to the needs of the different countries where such an entity or organization has extended its operations to. On the other hand, human resource policies that are differentiated according to each country’s needs are often drawn up by local based experts in the personnel department who understand clearly how the local environment, in this case a particular country’s environment, operates or functions. I would prefer that HSBC bank adopts different human resource policies for each country where they have set up operations rather than settle for a globally standardized personnel policy. This is because each country in the world has its own culture and the general way of life where workers feel very comfortable working in. Workers will always try to resist an imposition of policies that appear more foreign to them than is localized. As such, it may even affect their general working performance and that of a given national subsidiary, resulting in losses and slow growth.

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Difficulties Encountered in Pursuing Different Human Resource Policies for Each Country Introduction A differentiated or decentralized human resource function has more advantages to a global company like HSBC bank than standardized human resource policies. Having said so, however, different HR policies for each country also pose a number of challenges which companies must contend with. This section analyses possible drawbacks or difficulties that such global firms will encounter in pursuing a differentiated human resource policy and also provides solutions that could remedy the situation.

Possible difficulties Pursuing a differentiated human resource policy for each subsidiary of a global firm could prove to be very costly to the organization. With over 20 international branches for HSBC bank, the bank would be forced to employ HR professionals and experts in all the countries who

9 will help me drawing up unique HR policies for all the countries involved. These experts and professionals are highly compensated and therefore affording to maintain them in virtually all the countries that host an HSBC bank means the organization will pay them dearly. This would eat up the bank’s net profit and might end up exposing it to a lot of competition from other banks which compete with HSBC in the local economies (Raby, 2009).

However, the issue of cost can effectively be addressed by the bank’s headquarters if it carries out a thorough analysis and eventually groups the countries according to common features and characteristics. Some countries in the world experience the same features and their characteristics, in terms of culture and general beliefs, always tend to be similar. In grouping such countries together, the HSBC bank headquarters can effectively assign them the same HR professionals who will actually cover the countries as a whole. This will effectively eliminate the issue of cost which emanates as a result of employing too many experts who are all paid salaries together allowances at the end of every month.

Differentiated HR function for global firms are also difficult or complex to work with.

Since each country has its own unique system and policies for the personnel department, it becomes difficult for the headquarters to dispatch expatriates from one country to another. For HSBC bank, it would mean that such expatriates take a lot of time studying and acquainting themselves with a particular country’s working modalities and systems before eventually being able to settle down and undertake responsibilities. This leads to too much lost man hours during the time when the expatriates are studying and getting themselves acquainted with a local subsidiary (Hutzschenreuter & Gröne, 2009).

In response, HSBC can tackle such challenges by opting to train expatriates from at least all the countries where the bank has operations in. These expatriates will later on prove

10 worthwhile in assisting the subsidiaries to record good results, particularly for the international branches that are appearing to struggle in business. Since these expatriates actually hail from the country in question, they will not take up a lot of time trying to understand how the local HR policy operates. Instead, they will venture into their roles and responsibilities directly and the influence of their expertise will be felt almost immediately.

From a customer’s point of view, a differentiated human resource policy might not fully satisfy those customers who travel a lot. Due to its elaborate global network, HSBC bank customers can still access their accounts from different countries without necessarily having to wait until such a time when they will be back to their home countries. These customers, however, have a service expectation that is based or tied to the manner in which workers in their local banks back at home receive and handle them. Thus, when such workers are away from home and experience a different service experience from HSBC bank workers in the foreign country, they might feel less appreciated and even contemplate opting out of the bank altogether.

The difference in their expectation is brought about by the fact that these workers are not guided by the same policy guidelines but rather adhere to what the HR policies in their home country stipulates. The workers may not be at fault whatsoever but the ultimate reason for doing business is always to satisfy customers and therefore his concerns or fears need to be addressed promptly (Busch & Hoffmann, 2009).

In order to address this shortcoming of the differentiated HR policy strategy, HSBC bank needs to avail fliers and other material communication within all their banking halls for purposes of customers, especially those who are foreigners in the country to be able to read and have a firsthand feel about the kind of general service and experience to expect. Such fliers and brochures can be printed in the common languages that are spoken by a majority of customers in

11 all the countries where the bank operates in. alternatively, the banks could have special counters which are purposely set aside for serving alien customers. The cashiers manning such counters need to have special training on how to handle such customers on top of their normal banking training and skill.

In pursuing the differentiated human resource policy structure, HSBC bank might not succeed to build an overall corporate culture which is very important for any business organization. An organization needs to have a culture which makes it easier for people to identify it with. It is this culture that helps to draw customers and also qualified talent and skill whenever the organization is faced with the need of conducting employments or new recruitments. Since most subsidiaries under this arrangement have their own custom made personnel policies, it might prove difficult to expect the workers of the organization to have a common culture or view on numerous aspects (Moore, 2010).

The HSBC’s central office located in Hong Kong can remedy the lack of organizational culture by trying to organize for forums, seminars and even workshops that will lead to the workers meeting together so often and sharing their experiences together. That integration will help in building a corporate family that share in the same beliefs and almost similar practices. It will also help in making the workers develop that strong sense of belonging, which is a quality competent skill in the world of business.

Differentiated organizational structures often are associated with a lot of autonomy where subsidiaries might begin to be operated as though they were independent of the headquarters.

This could offer room for the perpetration of vices because the local management team feels they have too much freedom and are not closely being monitored by their managers at the head office.

For instance, managers of HSBC bank subsidiaries might fail to follow the overall recruitment

12 requirements as is stipulated in the HR policies and instead employ only their cronies, family friends and their blood relatives. This will eventually affect the performance of the bank’s subsidiary because of lack of competent skills and expertise. It may also result in industrial actions on the part of the other employees who might feel their managers are sidelining them as they seek to bring their own people (Peterson & Thomas, 2007).

The headquarter office of the bank can still manage to reign in on the too much freedom that is brought about by the differentiation strategy, and which could in turn end up to be a recipe for chaos. The head office in Hong Kong needs to keep closely in touch with workers in all the subsidiaries by allowing them to voice their concerns about their local management. Through the use of the internet and other technological innovations, workers can put comments or send suggestions online so as to be relayed to their headquarter offices. This way, the head office will be fully informed of the goings on at the subsidiaries. Alternatively, representatives from the head office need to carry out constant inspections and engage in fact finding missions so as to be fully aware of the situations on the ground.

In terms of management, differentiated HR policy strategies make it difficult for organizations having geographically widespread branch networks that straddle across international boundaries. In the case of HSBC bank, the central human resource function might not really manage to effectively plan, organize, direct, and control its entire workforce. This is because much of the decision making role is actually left to the local human resource managers who determine what the actual personnel needs of the subsidiary are and act accordingly to alleviate any delays and unwarranted performances. Effectively, the central human resource department in Hong Kong actually relies on feedbacks and reports from the national human resource managers before they can actually deliberate on the next course of action. These kind of

13 reversed roles between the headquarters and branch can fail to produce better results in the long run, particularly where planning fails or delays to be implemented (Wu, Lawler & Yi 2008).

Basing on trends from the previous fiscal years, the central office may try to avert such planning problems by forwarding tentative budgets that may be used by the subsidiaries especially during high uncertainty periods. Whenever such budgets prove little or limited, the head office can always act appropriately by advancing some more funds to the subsidiaries.

Although HSBC bank boasts of a huge workforce that is drawn from all the countries where it has set up operations in globally, a differentiated HR policy strategy almost confines them permanently to their own home countries. These workers become used to their local policies and will find it a lot difficult and demanding to work in a different working environment. As a company though, HSBC may sometimes face very complicated scenarios, such as shortage of workers in one country which may require very urgent replenishments in order for the bank to continue with its operations with little or less challenges. For such unwarranted time periods, the bank may not resort to hiring new workers because their training would take up a lot of time, a situation that may lead to losses and slowed business performance.

The HSBC bank headquarters should not wholesomely allow the branch networks to handle their human resource needs. Experts in the head office will need to study the exclusive policy drafts from all the country branches and subsequently try to merge them such that they may end up with a hybrid document. This document should then be handed back to the subsidiary branches so that the training may incorporate their findings, albeit at a lesser degree as compared to the localized policies themselves. The aim of doing this is empower the workers so as to have a broader perspective of HSBC bank as well. In case there is need to send these

14 workers to a different country, they can easily take up the challenge and produce better results (van der Voort, Glac & Meijs, 2009).

Conclusion In the contemporary world, businesses are constantly seeking to expand their operations and markets by establishing themselves in foreign countries. With the high class technological advances and innovations, these organizations still manage to integrate their elaborate networks and achieve proper coordination across the globe. There are two distinct management strategies that such global companies employ in order to effectively run their networks. These strategies are standardized human resource policies and differentiated human resource policies.

Standardized policies are comparatively cheap because they do not require the drawing up of numerous HR policies for all the countries where a global firm, such as the HSBC bank operates in. Equally, standardized HR policies are less complex to implement because they apply across board and the central HR function can implement them through such simple means as posting them on the company’s official website. On the other hand, countries can each adopt their own HR policies that fully address their unique cultures and problems. This strategy is the best because it allows for customization, meaning producing accurate solutions to unique problems. It also manages to create a sense of close cooperation and unity between workers in a given country and their immediate managers.

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