Strategic human resource management

Strategic Human Resource Management

Executive Summary Strategic human resource management has emerged as an important concept in the modern business environment since it is an approach that focuses on improving employees’ performance and effective resource management towards the achievement of business goals and objectives.

HSBC, which is the leading financial services organization across the globe, recognizes the significance of strategic human resource management. The purpose of SHRM within HSBC is promote the achievement of the bank’s strategic priorities through ensuring suitable people management policies and practices and adopted and implemented across the organization. HSBC has vertically decentralized organizational culture that is based on autocratic leadership, which is associated with some drawbacks like increased work burdens and an extremely controlled working environment.

Even though HSBC has an organizational culture that is based on diversity and inclusion, the firm needs to integrate IT into its overall operations in order to enhance its competitiveness. The plan for expanding the firm’s IT structure entails establishing a standalone IT department that is separate from other departments and providing new digitized banking products and solutions to customers such as process apps. This will require establishing a culture of innovation that promotes creativity across all work processes. Additionally, HSBC should encourage employees to recommend and/or develop new digitized product offerings and solutions and incorporate innovation as one of the performance objectives and measurement metrics.

Strategic Human Resource Management Strategic Human Resource Management (SHRM) is defined as a proactive approach that is geared towards developing improved support for employees in order to enhance their performance or contributions based on human resource practices. In this case, the human resource manager needs to ensure that HR policies and practices are in line with the organization’s overall strategy in order to establish a suitable work environment that promotes the realization of established goals. This report examines the four major human resource areas at HSBC Hong Kong to ensure that current HR policies and practices contribute to a positive impact on the bank. The report will include discussions on the significance of strategic human resource management within HSBC, the role of HRM in HSBC, the development and implementation of human resource plans within HSBC, and current internal and external policies that affect the operations and success of HSBC. The report will also focus on examining the managerial and operational functions of the human resource manager in relation to strategic

human resource management. The managerial functions include planning, coordinating, staffing, controlling, organizing, budgeting, and implementing. On the other hand, the operational functions include planning, recruitment and selection, performance appraisal, training, employee welfare, and promotions.

Purpose and Role of SHRM within HSBC HSBC, which was founded in 1865 in Hong Kong, has experienced tremendous growth since inception to an extent that it currently operates in 70 countries and territories across the globe (HSBC, n.d.).

One of the most important factors towards the success of this organization is its human resource policies and practices given that it employs approximately 30,000 people in Hong Kong. In addition to the huge workforce, HSBC also employs and manages different kinds of individuals throughout the globe.

This is based on the belief that employing and managing the various kinds of people helps in the development and establishment of a balanced and well-rounded organization and enhances its capability to adapt to various kinds of situation. HSBC recognizes that suitable treatment of employees is a crucial component towards achievement of maximum productivity and value. When employees are treated in a suitable manner within the working environment, the organization has the ability to realizing desired productivity and success. In this regard, effective human resource management policies and practices are crucial towards ensuring employees are treated in a suitable manner that helps enhance their contributions and performance towards realizing desired business goals and objectives.

Strategic human resource management is defined as a proactive approach that is geared towards developing improved support for employees in order to enhance their performance or contributions based on human resource practices. SHRM has been developed following attempts by human resource practitioners to align human resource management with strategic management (Dhar, 2008). Therefore, strategic human resource management plays a crucial role in enhancing organizational performance (Cania, 2014). For HSBC, the role of strategic human resource management is to enhance the organization’s performance through development of effective measures for people management. This is particularly influenced by the organization’s recognition that effective and efficient treatment or management of the workforce is vital towards achieving its goal of being the leading and most respected international bank across the globe. Therefore, the purpose of SHRM within HSBC is promote the achievement of the bank’s strategic priorities through ensuring suitable people management policies and practices and adopted and implemented across the organization. In this regard, HSBC has created specific strategic priorities and aligned them with human resource management.

Plan to Expand HSBC’s IT Department and IT Plan In light of rapid technological advancements, HSBC recognizes that information technology is an important aspect of its operations in Hong Kong and across the globe. To this extend, the organization has established an IT department that is known as HSBC Operations, Services, and Technology (HOST). This department provides critical operational services, information technology and technical support to help in effective functioning of the bank and delivery of excellent customer service (Lisa, n.d.). Some of the other responsibilities in this department including managing IT infrastructure, system and support, developing software and applications that facilitate banking systems, and running and managing customer operations.

Through the IT department, HSBC creates, implements, and support software and other technological processes and services that enable the bank to continue providing high-quality banking systems. The IT infrastructure not only comprise processes and systems that focus on customer service but also includes supporting services for employees. The work areas of the IT department at HSBC include deployment and production support, data centre management, software development, client services, project management, enterprise services and architecture, and risk and administration (Lisa, n.d.).

While the IT department has played a crucial role in ensuring effective operations within HSBC towards the achievement of the overall business goals, it can be expanded in order enhance its effectiveness and efficiency in improved operations. Based on the current framework, this IT department is linked to Global Operations and Global Procurement departments. One of the major ways for expanding this department is to separate it from the other linked departments and establish it as a standalone department that only focuses on IT infrastructure, systems, and processes.

The banking sector in Hong Kong, where HBSC operates, is facing several technological enhancements as the various competitors in this industry strive towards their enhancing competitive advantages and delivery of customer services. One of the current competition and enhancements in technology in Hong Kong’s banking sector is digital transaction. While HSBC has focused on enhancing existing solutions internally through improved IT processes and systems, it is facing competition relating to the proliferation of digital transactions.

This is primarily because of the increased demands for digital functionality and cost-efficiency by customers in the banking sector (Deloitte, 2014).

In light of the increased demand for digital banking transactions by customers, HSBC’s plan towards expanding the IT department should begin by establishing it as a standalone department.

This will help in improving the efficiency of the department by establishing a single focus of its operations i.e. technology. In the current framework where the department is linked to other departments, the focus of the IT department not only entails focusing on IT processes and system but also entails handling other aspects of operations such as customer service. This hinders the effectiveness and efficiency of the department in providing suitable technological services and processes.

Once the IT department is established as a standalone division within HSBC, the bank should increase investments in the digital space or infrastructure. This would entail revamping digital offerings and solutions in new digital landscape in order to capitalize on the increasing demands by customers for enhanced technological capabilities in banking services. The revamping of these offerings and solutions would entail identifying, developing and utilizing new digitized products and offerings that enable customers to access the bank’s services in a convenient and easy way.

One of the digital products or offerings that HSBC should consider developing is process apps, which focus on digitizing and automating several repetitive low-risk and low-value banking processes and transactions (Broeders & Khanna, 2015). This will help enhance banking processes because it enables customers to carry out their transactions at their convenience while contributing to paperless, more-efficient work processes. Through process apps, customers can easily apply and obtain approval for a loan, open and understand how to fully utilize a bank account, and handle other banking processes/transactions. When developing process apps, HSBC should ensure that they are available across different digital devices and platforms such as mobile phones, tablets, and computers. According to Gartner (2016), the available digital banking solutions and platforms provide several capabilities that improve customer service and the relationship between the bank and its customers. Some of these capabilities include payments, financial management, customer communication management, marketing, analytics, and loyalty.

The implementation of this IT plan requires identifying human resource plan objectives and strategies. In this case the objectives and strategies include establishing cross-functional teams that work together towards testing and improving the programs and creating an innovative organizational culture. The execution of this IT initiative will require HSBC’s human resource department to recruit individuals with competencies in the creation and implementation of innovative solutions in an organization. Current employees should be trained on proposed innovative solutions and how to implement them. Once the training is carried out, the HR department should create cross-functional teams that handle different aspects of the digital product offerings and solutions. The bank’s employees should be rewarded based on their contributions towards effective implementation of these digital products and offerings. The below chart illustrates the employment cycle of such plan.

This IT initiative/plan will contribute to achievement of HSBC’s business objectives through enhancing the speed and efficiency of work flows within the organization. Additionally, the plan will help in achievement of business objectives through increasing the bank’s connectivity with key stakeholders and expands and improves decision making (Broeders & Khanna, 2015).

Analysis of Current Internal and External Policy As one of the largest financial services institution across the globe, HSBC believes in offering equal career opportunities to people from all walks of life (HSBC Career, 2009). As a result, the organization encourages qualified individuals to apply for the various career opportunities when there are vacancies. Additionally, this financial services organization provides a wide range of initiatives that are geared towards establishing and supporting a diverse workforce. Through these initiatives, HSBC also support the professional growth aspirations of members of its workforce. HSBC’s human resource practices are guided by internal and external policy relating to various human resource aspects such as staff turnover, qualifications, government policy and labor market competition.

One of the current policies utilized by this financial institution for its human resource practices is the Global or International Talent Management policy for attracting recruiting and motivating employees (Loewenberger, 2014). Through this policy, the organization utilizes an ethnocentric approach in recruitment and hiring employees. This approach helps in ensuring that the recruitment process of the firm differs from country to country because of consideration of cultural differences when hiring employees. The second internal HR policy utilized by HSBC is an inclusion policy that facilitates the recruitment of people from diverse cultural and ethnic backgrounds. The inclusion policy is geared towards establishing a diverse workforce in HSBC’s workplace because of the increased diversity of the modern business environment due to increased globalization.

The external policies affecting human resource practices at HSBC include the Employment Ordinance, which is the major piece of legislation that governs employment conditions in Hong Kong (Labor Department, 2015). This regulation affect HSBC’s HR practices through covering a wide range of issues relating to working conditions, employment protection, and employee benefits. Some of these issues include salaries and wages, unionization, and termination of employment contract. The other external factor that has an impact on HR practices at HSBC is Competition Ordinance, which helps to ensure fair competition in different sectors in Hong Kong’s business environment including the banking sector.

The Global or International Talent Management effectively deals with staff turnover through ensuring that suitable recruitment and selection practices are adopted when hiring new employees. One of the strengths of this policy is that it enables HSBC to carry out comprehensive processes that ensure the right candidate is hired for the right job. This helps to avoid staff turnover by ensuring the banking institution recruits and maintains the right talent for the right job. However, the limitation of this policy is that it seemingly focuses on recruitment of senior managers rather than recruitment and selection of employees for all job positions. The inclusion policy is also a crucial regulation relating to qualifications of candidates for vacant job positions at HSBC. The strength of this policy is that it focuses on ensuring that HSBC’s workplace is characterized by a diverse workforce from different cultural and ethnic backgrounds. However, the limitation of this policy is the increased emphasis on culture as the

premise for promoting diversity. This policy ensures the cultural and/or ethnic considerations are made when making decisions about a candidate’s qualification for a job position or vacancy.

These are important considerations given the increased significance of a diverse workforce in the modern business environment.

The strength of the Employment Ordinance is its focus on handling different aspects relating to working conditions, employment benefits, and employment protection while its limitation is the lack of a specific focus on the banking sector. Nonetheless, this governmental policy is crucial for HSBC’s operations because it provides the foundation with which the banking organization develops and implements it HR policies and practices as well as creating a suitable work environment. On the other hand, the strength of the Competition Ordinance is its focus on ensuring fair competition in the country’s entire business environment through the First Conduct Rule (Brown, n.d.). However, its limitation is the general approach in handling competition issues, which implies that it does not specifically focus on the banking industry. This policy helps in guiding business practices adopted by HSBC towards recruiting and maintaining a highqualified workforce and business operations.

Critique of HSBC’s Organizational Design Organizational design and structures have been the subject of increased scrutiny in the field of business management. As a result, several business management scholars and researchers have developed several theories and concepts that help in examining and understanding organizational design and structures. According to Weber (1997) and Mintzberg (1987), an organization is divided into three major dimensions including the strategic apex, middle line, and the operative core (Lunenberg, 2012). The strategic apex basically includes the organization’s top management while the middle line refers to the lower management level such as supervisors who work with employees to ensure the accomplishment of respective tasks based on daily job targets. On the other hand, the operative core refers to employees who are involved in carrying out various job responsibilities and tasks on a daily basis towards the realization of established business objectives and goals.

HSBC has a decentralized organizational structure in which different organizational departments are coordinated based on the three aspects of organizational structure developed by Mintzberg.

As shown in its group structure, HSBC is headquartered in the United Kingdom and spreads across different regions across the globe including Asia and Latin America (The HSBC Group, 2016). Based on this group structure, the firm’s major decisions are made in the United Kingdom i.e. the headquarters and spread down to the other branches, which implement the decisions. In this regard, HSBC’s organizational design is based on vertical decentralized through which power is distributed down the chain of command (Kumar, 2015). Despite the vertical decentralized, the major drawback of HSBC’s organizational design is bureaucracy. Bureaucracy emerges from the fact that the organizational design is based on autocratic leadership, which is disadvantageous in some cases (Hendry, 2013). This organizational design creates an extremely controlled work environment that could hinder employee creativity while increasing work burdens. Additionally, HSBC’s employees are seemingly excluded from key decision making processes because of this organizational design.

HSBC’s Organizational Culture One of the most important components of HSBC’s operations is organizational culture, which plays an important role in determining the nature of the work environment and employees’ contribution towards work processes. The significance of organizational culture in the modern workplace has attracted considerable attention among scholars and researchers to an extent that several concepts and theories have been developed in attempts to explain organizational culture. An example of a theory that was developed to explain organizational culture and its various components is Schein’s Structural Model of Organizational Culture that suggests different levels of organizational culture. According to Schein (1992), an organization’s culture can be understood as comprising different layers since the organization is a focused social system. The levels/layers of organizational culture are artifacts, espoused values, and basic underlying assumptions (Kong, 2003). Artifacts are relatively difficult to decipher since they are visible organizational structures and processes whereas espoused values are promoted justifications such as strategies, philosophies, and goals.

On the other hand, the basic underlying assumptions refer to the eventual source of organizational values and actions though they are perceptions, feelings, beliefs, and thoughts that are usually taken for granted or occur unconsciously.

Currently, HSBC’s organizational culture has these three levels of culture that are geared towards promoting and ensuring effective operations. The current organizational structure is a decentralized organizational design in which decisions are made by the top management and passed down the chain of command. Based on this structure, the top management guides organizational processes at HSBC as leaders are involved in managing and supervising employees’ input and contributions. With regards to espoused values, HSBC’s organizational culture promotes the establishment of a diverse workforce and leadership team (HSBC Culture, n.d.). As a result, the organization not only focus on hiring and retaining people from different national and cultural backgrounds but also encourages employees to adopt flexible and alternative working methods. The organization also promotes sustainability i.e. responsible operations towards effective management of the environment and society it operates in.

For its IT department, HSBC’s top management manages and supervises employees’ initiatives towards providing services to customers and technical support provided to other departments.

Additionally, individuals in this department are encouraged to identify and utilize different and alternative ways of working that help improve work flows and processes. However, for HSBC to achieve its strategic goals, its important to establish a culture of innovation that helps in providing digitized banking products and solutions to customers. While the current culture has played an important role in the firm’s effective operations since inception, the achievement of strategic goals in the increasingly competitive market requires creation of an innovative organizational culture. One of the ways to integrate IT into overall HSBC operations is to encourage employees to recommend and/or develop new products offerings and solutions that are centered on digital platforms. Secondly, the organization should incorporate innovation as one of the performance objective and measurement metrics in order to foster an innovative organizational culture. In this case, the evaluation and corrective mechanism for employees’ input to work processes will be based on creation of digitized products and their performance.

Conclusion HSBC is one of the leading financial services organization across the globe given its tremendous profitability and success through the years. This success is attributable to strategic operations adopted by the firm’s top management and the establishment of a suitable organizational structure and culture. However, in light of increased competition in the banking industry in the recent past, HSBC can enhance its operations through providing innovative digitized banking products and solutions to customers such as process apps. This would require integrating IT into overall workflow processes through creating an innovative organizational culture. This would require encouraging employees to recommend and/or develop new digitized product offerings and solutions and incorporating innovation as one of the performance objectives and measurement metrics.

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