UNIVERSITY OF BEDFORDSHIRE

LEADING PEOPLE IN ORGANIZATIONS

SHR601-6

Assessor: Dr PAULINE LOEWENBERGER

HSBC CASE STUDY

Executive Summary

Financial Institutions are known to be highly imperative of continuation of globalization

throughout the world. Hence each and every economy has to focus on establishment and

proper functioning of both local and globalised financial institutions. HSBC is one of world

recognized organization which has great influence on world economy.

HSBC can be identified as world largest banking and financial service corporation which was

established in 1991 as a parent company for Hong Kong and Shanghai Banking Corporation.

Company occupies 267000 employees.

As HSBC is an organization dealing with risky conditions related to financial management,

human talent would be most important asset of an organization. To conquer full commitment

from employees, HSBC uses different human resource management policies and practice.

Conversely organization need to be conscious of cultural diversity of people as it has

circulated branch network among numbers of countries with different cultural backgrounds.

Hence HRM practices of organization supposed to be differed from region to region.

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Table of Contents

Introduction…………………………………………………………………………………………….4

Analysis of HSBC's HRM policies and practices in East Asia………………………………………...4

Recruitment and Selection…………………………………………………………………………...4

Training and Development…………………………………………………………………………..6

Reward System………………………………………………………………………………………8

Conclusion…………………………………………………………………………………………….10

Recommendations……………………………………………………………………………………..10

References……………………………………………………………………………………………..12

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Introduction

Increasing globalization has created more awareness of the need for managers to be sensitive

to the cultural aspects in human resource management. Proper human resource management

brings an understanding regarding the values and beliefs of employees from different cultural

backgrounds. This report is comprised with evaluation and analysis of key performance areas

in human resource management of HSBC Holdings PLC.

HSBC as an organization which operates globally with thousands of employee base, strategic

HRM is inevitable. Recruitment and selection process of organization performs a significant

role in attracting talent to the organization. Training and development strategy enhances

employee job performance as well as career growth, further performance management and

reward strategy defines the evaluations and returns for better performances.

Recommendations have addressed aspects to be improved.

Analysis of HSBC’s HRM policies and practices in East Asia

Human resource policies and practices grant organization to structure to be followed and

guidelines for reacting to particular situations (Alcázar et al, 2005: p.633). If organization

does not have specified policies and practices of HRM it will complicate the situation rather

than resolving it. In the context of HSBC, organization cannot implement standardized HRM

system with standard policies and practices in each region of world. Hence HSBC has taken

up cultural differences in to consideration when stipulating HRM policies and implementing

HRM practices.

Recruitment and Selection

As per Schuler and Jackson (2000:p.65), the process refers to identifying best suited

employee for a particular position among pool of candidate is known as recruitment and

selection. Every organization should be comprised of specified and appropriate recruitment

and selection policies which encounter of selecting most suitable candidate who matches with

organizational requirement.

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When HSBC was moving in to Asian market, especially in to East Asia they had to face with

problem of deficient in required talent from local labour markets. Many of Asian economies

Such as China and Vietnam often have unskilled and semi-skilled workers but not trained

people with required skills. As other MNCs, HSBC also had to adopt ethnocentric approach

in to their recruitment policies and procedures. This problem became more critical as HSBC

was expanding businesses over the globe. Because of this HSBC was face with difficulty in

finding skilled bankers locally (Treanor, 2007:p.35). This may be a challenge to business

expansion in developing countries where level of education remains at a lower level.

Recruitment and selection process of HSBC is initiated with filling online CV in electronic

form. After referring the CV by HR team of HSBC determined it as suitable or not for

particular position. Those applications will be checked against the prerequisite skills and

qualification required for job (Tiwar and Buse, 2006:p.112). Then candidates have to

countenance with ability test which known as aptitude test. In this scenario HR team of

HSBC considers cultural barriers and perceptions of people. As an example perceptions of

Asian person might be totally different from European person. Hence HSBC never tries to

attitudes of people using questions exposed to cultural differences. Selected candidates

should be confronted for face to face interview and outstanding personalities will be selected.

If organization is unable to find suitable people they have to import talent from foreign which

incurs larger cost to the organization.

As a solution, HSBC used Global or International Talent Management process as a mean of

attracting, retaining and motivating people. Ethnocentric approach is used by organization for

most of occasions, but there were some instances where it is no longer suitable. Hence need

for proper program became inevitable (Brunner et al, 2004:p.90). As the first step of

International Talent Management process, need to identify senior manager talent pool among

management positions. For this HSBC uses 360 Degree feedback, interviews, Panel

assessment and self and manager assessments with the purpose of collecting information who

suits for management positions (Storey, 2002: p.235), Organisation expects to avoid need for

recruiting foreign employees for managerial positions of branches in developing countries

such as China, Vietnam and Nepal. HSBC emphasizes on integrity, collegiality and diversity

as core competencies needed for a leader. Afterwards they expand talent pool beyond the

senior management and forward to junior managers and other competent employees. Through

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development programs focused on core competencies, organization expects to develop

leadership of all level employees.

Figure no.01: Global Talent Management Process at HSBC

(Source: ww.slideshare.net/adelinawomack/global-talent-management-at-hsbc-)

Recruitment process of HSBC is different from country to country. There may be two

different systems of recruitment in Europe and Asia. It is an advantage for organization as it

helps to identify cultural differences and organization will be able to turn those implications

in to opportunities for gaining higher level of commitment from employees. If organization is

implementing standard system over the globe it would not beneficial for organization as each

country and people may not desire to move with that system (Martin et al, 2005:p.263). If so

it may create internal troubles as well as external troubles.

If we considered International Talent Management process it will be greater opportunity for

middle and lower level employees to climb up their career ladders through own

competencies. This process can explain using behavioral theory of leadership which describes

leaders may not instead they are made (Marchington and Zagelmeyer, 2005:p.33). Believing

above phase HSBC is attempted to create future leaders within organization eliminating need

for headhunting or recruiting talent externally.

Training and Development

As globe is exposed to tentative, compound and erratic situations, has a pressure on

organisation to constantly develop and be adoptable with both external and internal

environmental dynamics. Most of business organisations mainly compete through human

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talent. Hence they should be prepared employees for successfully deal with upcoming

situations (Rosemary, 2005:p.5).

Basically training is a methodical procedure of mounting knowledge, skills and attitudes to

enhance performance of current job which helps individual employee to meet up with job

requirements easily up to the expected level (Derek,2004:p.363). Conversely development

refers to developing employees to do more challenging job in future. In other words

development can be defined as equipping employees to take more challenges in the future.

In the context of HSBC, they organise and design training programs by regional training

teams. But they disseminate instructions to each country and Country HR manager and HR

team will be responsible of implementing training programs in local offices. As per Bowers

(2008:p.24), each and every employee eligible for training programs depending on their

service period.

HSBC has placed vast attention on training and development of employees in HSBC offices

located in developing countries. Hence they have used number of training methods to train

employees such as management training, leadership training, language and technical skill

training (William et al, 2004:p.4). Those are common for all departments. Addition to those

employees of East Asian countries have provided with special skill trainings as class room

based trainings kind of off the job training program and day to day or on the job training

program which is a multimedia based e- training.

Analyzing the training and development in HSBC it is possible to say organisation is always

tries to make their employees competent through developing required talents and skills.

Through training HSBC employees will be able to improve their individual performance and

thereby it helps to augment whole organisational performance. As employees become more

talented it will increase the service quality of HSBC. One of imperative strength of

organisation can be derived as training and development and it would raise HSBC as world’s

best financial institution. On the other hand training and development of HSBC helps to

improve work efficiency by reducing wastage. It will offers further competitive price for end

services. Through this HSBC has become organization with one of best customer services in

the world.

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According to two factor theory of motivation by Fredrick Herzberg, every person has two

levels of needs as physical level and psychological level. Motivators are intrinsic factors

which mount the morale. Accordingly career development also can be defined as

motivational factor which enhances employee commitment and satisfaction (Cohn et al,

2005:p.83). Money is not sole motivator at the employment, and this is especially very true

for the 21st century. The people who work with organizations seek for more than fair

employment from work; they also look at the holistic development of themselves. Since

HSBC is offering employees with numerous training and development opportunities it will be

back-up for employees to develop themselves. But one of weakness of Training and

development of HSBC is lack of identifying individual weaknesses.

Reward System

According to Williams, 2003:p.28, reward can be defined as a stimulus which encourages

employees to exert higher level of commitment and effort towards the job tasks. In another

words reward system of particular organization can be defined as a mean for bridging the gap

between ability to work and motivation to work.

Since majority of Asian countries have limited number of skilled labour, need to be highly

competitive through offering spirited compensation and rewordings. Otherwise organization

may not be able to attract talented candidates and retain competent employees (Gibbons and

Woock, 2007:p.27). Mainly there are two types of rewards as financial rewards and non-

financial rewards. On the other hand each reward should be attractive to employees and need

to be aligned with organizational strategies.

HSBC offers their employees different employee rewards both financially and none

financially. In another words, HSBC is offering intrinsic and extrinsic rewards. Among most

of other global organisations HSBC has ranked as one of well-paying firm for own

employees. HSBC has espoused an ethnocentric approach to its reward system.

As explained by Daniels (2004:p.235), through rewarding system organisation expects to

increase productivity by mounting average performances of employees. By offering reward

system, organisation hopes to pull people towards their maximum effort in accomplishing

particular task. HSBC has offered standard procedure for reward management including

policies which offers ability to react in different situations. Conversely rewards may be

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morale boosters which help to accomplish particular task effectively. This can be explained

through Expectancy theory of motivation. It defines that individual employee believes that

his or her effort will lead to better performance and in turn it will guide to organizational

reward. In the context of HSBC, employees are committed for work mostly for financial

rewards such as bonuses and salary increments. Addition to those they will inclined to retain

with the expectation of receiving extrinsic rewards such as retirement’s benefits and other

employee benefits.

Figure 01: Expectancy Theory

(Source: Developed by Own)

Rewards system of HSBC would be a control for managing tardiness and absenteeism. When

employee performances link with rewarding system they will become motivated for

organizational functions and tend to be avoided negative attitude and practices towards the

work.

When employees are rewarded with non-financial rewards such as promotions, status and

ranking and etc employees will be satisfied of the job as they are gratified social and

psychological needs( Zaffron and Steve, 2009:p.89).

Before stipulating reward system HSBC is often consider views and expectations of

employees. If not employees will not be interested for given rewards and will not be

motivated to exert maximum effort further (Hewstone and Brown, 2000:p.55). Each reward

system implements by HSBC is easy for employees to understand. Hence employees can

work out of it without difficulty. Thereby confidence and trust of employees towards the

organization will increase.

Employees of HSBC are entitled for selecting desired rewards among others. Accordingly

they are given with prerequisites that should be accomplished in attaining particular goals.

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This would be positive point for organization as it boosts ability to alter with employee

preferences and needs of any transform in the conditions.

Even though rewarding system of HSBC has number of positive implication, can be seen

some negative aspects as well. There is a problem with just and equitability in

rewarding .This situation is critical in Asian countries as managers tend to be rewarded

employees depending on favourations rather than considering competencies. As per Glisson

and L James (2002:767), due to this situation problems may be created for organization as

employees perceive they are treated unequally. Thus HSBC employee turnover is somewhat

higher than employee turnover of European and Western countries.

Conclusion

Having analyzed the case of HSBC Holdings PLC, as a assignment requirement, able to gain

a wide understanding about Human Resource Management in a practical scenario and

identified factors which can be affected on leading employee behavior for achieving

organizational goals and objectives. Analysis of HSBC’s HRM policies and practices in East

Asia has evaluated positive and negative facets of organizational performances considering

imperatives areas as recruitment and selection, training and development and reward system.

Accordingly recommendations are proposed to overcome shortcomings with human resource

facets of an organization. Modern Organizations are competing through human talent.

Therefore human resource becomes most valuable assets in every organization. This study

has given me a broader knowledge. My intention was not only to fulfill the assignment

requirement but also to understand the practical application of the theories we learnt under

the subject Human Resource Management.

Recommendations

Recruitment is a crucial area of HRM as it mainly deals with attracting new blood to

organization. Hence organisation can establish recruitment policy which linked and reflect

corporate strategy of organisation. Through this organisation will be able to attract employees

who can occupy in achieving organizational objectives and people with competencies

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attaining those. This would be addressing specific need of recruiting candidate for a particular

job position.

On the other hand HSBC can be conscious of Cultural dimensions across countries and take

advantages from them. According to the Cultural dimensions of Hofstede’s, different regions

of countries have distanced cultural implications .Linking those in to recruitment processes of

each country, organization will be able to gain cultural opportunities in attracting employees.

This would be an advantage to attract most talented people from pool of limited qualified

bankers in East Asian countries.

HSBC has placed small attention on individual weaknesses in planning training and

development program. Instead they pull employees towards training and development

programs insisting on seniority and service period. If organization pays attention on

individual weaknesses, it will be much helpful in correcting their performance drawbacks and

enhancing employee performances up to the expected limit.

HSBC can link grievance handling procedure with rewarding system. Any rewarding system

may create grievances for a certain extent. Hence management of HSBC can develop

effective grievance procedure linked to reward system. Thereby organization will be able to

diminish conflicts can be occurred.

Performance management and reward system should be more tailored. Current performance

management system is considered only the job related aspects. But it is important to evaluate

all other characteristics of employees which related with their performances either directly or

indirectly. In turn organization will be able to create balanced employees who can manage

time and work with outstanding personality repercussions.

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References

Alcázar, F., P. M. Fernández & Forteza, J.A., and Prieto, J.M (2005), Strategic human resource

management: integrating the universalistic, contingent, configurational and

contextual perspectives, International Journal of Human Resource Management, p

633

Brunner, A., Decressin, J. ,Hardy, D. and Kudela, B. (2004), Germanys Three-Pillar

Banking System – Cross-Country Perspectives in Europe, Occasional Paper,

International Monetary Fund, Washington DC ,p.90

Bowers, S. (2008), HSBC loses disk with policy details of 370,000 customers,The

Guardian (London),p.24

Cohn, J.M., Khurana. R, and Reeves, L. (2005), Growing talent as if your business

depended on it, Harvard Business Review, p.83

Daniels, A. (2004), Performance Management: Changing Behavior that Drives

Organizational Effectiveness, 4th Edition, p.345

Derek, T., Laura, H. and Stephen, T. (2004), Human Resource Management,6th Editiion,

Pearson Education. p. 363

Gibbons, J and Woock, C (2007), Evidence-based Human Resources, The Conference

Board, New York,p 27

Glisson, C. and L. R. James (2002), the cross-level effects of culture and climate in human

services teams, Journal of Organizational Behavior, p 767

Hewstone, M., and Brown, R. (2000), Contact and conflict in intergroup encounters,

Oxford: Basil Blackwell Ltd,p 55

Martin, A. J., Jones, E. S. J. and Losey, M. (2005), The role of psychological climate in

facilitating employee adjustment during organizational change, European Journal of

Work and Organizational Psychology, p 263

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Marchington, M. and S. Zagelmeyer (2005), Foreword: linking HRM and performance --

never-ending search?, Human Resource Management Journal, p 33

Rosemary, H. (2005), Learning and Development, 5 th Edition, CIPD Publishing,p. 5

Schuler, R.S. and Jackson, S.E. (2000), Managing Human Resources- A Partner

Perspective ,London,Thomas Learning,p 65

Storey, J. (2002), Introduction: from Personnel Management to Human Resource

Management,Human Resource Management: a critical Text, London,p 235

Treanor, J. (2007), Taiwan gives HSBC £750m to take on Chinese bank, The Guardian,

London, p.35

Tiwari, R. and Buse, S. (2006), The German Banking Sector: Competition, Consolidation

and Contentment, Hamburg University of Technology, p.112

William, J., Rothwell, M. and Kazanas, H. C. (2004), The Strategic Development of Talent,

3rd Edition, Human Resource Development Press. p. 4

Williams, J. G. (2003), the importance of HR practices and workplace trust in achieving

superior performance: a study of public-sector organizations, International Journal

of Human Resource Management, p 28

Zaffron, L. and Steve, D. (2009), Performance Management: The Three Laws of

Performance: Rewriting the Future of Your Organization and Your Life,4th

Edition,Willey and Sons,New York,p.89

Web References

HSBC bank 'to offshore more jobs' (2005), (Online), Available from

http://news.bbc.co.uk/2/hi/business/4353423.stm/[Accessed on 29/03/2013]

About HSBC (2011)(Online), Available from http://www.hsbc.com/about-hsbc

[Accessed on 29/03/2013]

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