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Department of Business Systems HSBC in East Asia (before the 2008 credit crunch) SHR601-6 TITLE: INDIVIDUAL REPORT

Unit Leader:

Dr. Pauline Loewenberger

AMAR KUNAM

1229948

Addressed to:

Dr. Pauline Loewenberger

Date of submission:

8th April 2013

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EXECUTIVE SUMMARY: The report encapsulates about the HSBC`s managing organization and organization structure and its factors affecting them, also about the leadership and HRM policies and practices. This report details about managing organizations and how an organizational structure is important for the organization, various factors affecting the organizational structure are also discussed such as cultural influences. Drawing on various theories of leadership, HRM policies and practices of HSBC are explained. Leadership, which is an essential thing for an organization is explained with the models of leadership like Trait model, Behaviour model and contingency model. Trait model explicates about the trait approach of leadership and examples of some traits which also help HSBC to improve their leadership approach. Behaviour model describes about the behaviour characteristics of managers which make them as leaders. Contingency model entitles how a leader can attain their subordinates to engage in work and also in maintaining a relationship with employees. Human resource management part covers HRM definitions policies and practices. HRM policies and practices are reviewed using different models such as Fombrun model, Harvard model and matching model.

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Contents Page no. I. TITLE PAGE ............. 1 2 3-4 ......... 5 6 6 7 8 8 9 9 9 9 10 10 10 10 12 12 14


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II. EXECUTIVE SUMMARY ........... CONTENTS 1. INTRODUCTION

2. COMPANY PROFILE/BACKGROUND......... 3. SWOT ANALYSIS.......................................................................... 4. MANAGING ORGANIZATIONS...... 4.1Organization environment.... 4.2Strategy ................................... 4.2.1 Cultural Influences............................................................... a. Sense of self and space..................................................... b. Communication and Language......................................... c. Dress and appearance....................................................... d. Time consciousness.......................................................... 4.3 TECHNOLOGY....................................................................... 4.3.1 Information technology....................................................... 5. LEADERSHIP...................................................................................... 5.1 Leadership models................................................................ a. Trait model......................................................................... b. Behaviour model...............................................................
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c. Contingency model...........................................................

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6. HUMAN RESOURCE MANAGENT................................................ 6.1 Definitions............................................................................ 6.2 HRM Models......................................................................... a. General or Formbrun model............................................ b. Harvard model.................................................................. c. Matching model................................................................ 7. CONCLUSIONS.............................................................................. 8. RECOMMENDATIONS................................................................... 9. REFERENCES................................................................................

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1. INTRODUCTION: The aim of this report was to evaluate the leadership, HSBC`s HRM policies and practices in East Asia, global talent management, Standardised rewards and high levels of investment in training and development. This report details about how the recruitments of the HSBC Company were done and how the HSBC maintained the reward policies of the employees. This report also entitles about the HSBC training and development of the staff and employees encounter with the organisational objectives. The key issues identified are as follows

Recruitment hurdles of HSBC skilled managers in Asian markets. Lack of research in market for recruitment. Key principles involved in attracting, motivating and retaining employees. Impact of cultural and social influences in recruitment. Reward practices of employees. Training, developing, learning for the staff. Employees encounter with organizational objectives.

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2. Company profile/ background: Hong Kong and Shanghai Banking Corporation limited is known formally as HSBC. HSBC was first established in March 1865 at Hong Kong and Shanghai. The HSBC Plc has been running since 148 years. East Asia is a sub region of Asia; East Asia holds 28% of Asian continent. HSBC has 300,000 employees over with 100 languages. HSBC holdings plc is the number one in the future global 500 in 2007 is world`s largest company and bank. It has a very huge operated network of around 600 offices in 20 countries in Asia Pacific region. HSBC are the first to give public loan in china 1874. HSBC was the first bank established in Thailand. HSBC was established internationally very soon. Many changes have been observed in the global financial industry. All these changes increased the competition among the financial institutions.

3. SWOT ANALYSIS: Considering the SWOT analysis on HSBC STRENGTHS: HSBC is a well established bank. HSBC are world`s largest bank and most profitable banking corporation. HSBC has great international presence. HSBC promotes corporate culture in achieving success. HSBC is one of the well capitalized banks.

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WEAKNESS: Poor performance of personal financial segments. Poor financial management. Lack of marketing focus. Management and personal weakness are often hard to find.

Opportunities: Expansion of business into the other countries. Growth in such emerging countries will increase profits. Broader business environment. High level of capitalisation. Successful in creating image of being safest bank for depositors.

Threats: It has culture and social influences. Financial markets likely to be creating competition in financial market. Trusts in bank decreased because of the financial crisis and recession. Fall of financial market.

4. MANAGING ORGANISATION (organizational structure): Managing organizational structure is very important because a good organizational structure gives good efficient outcomes. Moreover all the companies are facing the competitive environment. In order to face the competition the company has to manage a good organizational structure. Organization structure defines how efficient and effective the organization resources are being used. Organizational structure not only defines efficiency, effective but also helps in achieving the organizational goals. There are four factors that are mostly affecting the organizational structure. I. II. III. IV. ORGANIZATION ENVIRONMENT STRATEGY TECHNOLOGY HUMAN RESOURCES

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FIG: Factors affecting the organizational structure

4.1 ORGANZATIONAL ENVIRONMENT: The organizational environment in external is changing rapidly which results in increasing the uncertainty. Whenever the level of uncertainty increases the stability of the organization structure becomes unstable. If the HSBC gives the authorization to lower-level employees, that gives a flexibility for the organizational structure and organization as well. Hence if the external environment is having more stability, then the stability of the organizational structure is unaffected. 4.2 STRATEGY: Strategies are the method of using the resources for future achievement of a goal or solution for the problem. Whenever a strategy is going to be set, the strategy has to be implemented in the right means. HSBC uses global talent management process for attracting, motivating and retaining the employees. They came up with the idea of giving information like multiple sources of data, panel interviews, and 360 degree feedback for the talented people. From that they were able to find and get the potential, specialists for fulfilling their future positions. But there are cultural and social influences while making the talent decisions. So the talent decisions are influenced by the cultural and social influences.

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4.2.1 CULTURAL & SOCIAL INFLUENCES: If a company emerges into a new market it spends time and money on accuracy and sophistication of the financial market. HSBC also implemented the same in spending time in accuracy and sophistication of financial market. But what they forgot was cultural and social influences. There are different categories for understanding the cultural and social influences. Some of them are as follows: 1. Sense of self and space. 2. Communication and language. 3. Dress and appearance. 4. Time consciousness. a) Sense of self and space: Self comfort can be expressed in different ways by different cultures. This entitles that one`s self comfort can be expressed in their own culture. Similarly HSBC also faced the same cultural and social influences. Some of the staff might be feeling that having a same culture as their colleagues makes them ease of work. Americans when communicating take more distance between the two, where as Latins and Vietnamese stand closer together for communication.

b) Communication and language: Communication plays a vital role in the business system. Because of language, the slang differs from culture to culture and also from place to place. Body language and gestures also differ with culture. Gesture is the first sight of appearance that varies for most of the cultures. It is true that many gestures are unique to particular areas and in some areas they are meaningless. Some gestures are very specific to some regions particularly. Morris et al. (1979) studied about the usage of twenty gestures in forty places in Europe and around the Mediterranean. Some gestures are used in certain areas only while the same are not used in other areas. For example, the pursed hand is rarely used in Britain, query in Italy, good in Greece, Slowly in Tunisia and Fear in France.

c) Dress and Appearance: Dress and appearance depicts about the outward garments as well body decorations. These decorations tend to be culture distinctively. Dress and appearance is also an important aspect regarding cultural influences. For example Indians prefer the traditional way of appearance and some others prefer the western appearance. Dress
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and appearance do seem to communicate some particular dimensions in social meaning.

d) Time Consciousness: Time consciousness differs by different cultures. Some cultures prefer to be exactly at time while some others prefer to be in relative. For example Germans are more prompt about the clock, Where as Latin`s prefer to take it very casual. In some countries subordinates are required to be on time at the meetings where the boss arrives after the subordinates presence.

4.3. Technology: Technology means a blend of skills, tools, computers and equipments which are used in goods and services. People are quickly changing and adapting to the new trends of the technology. The technology used by organization must be easy. If the technology used is more complex, Difficulty for the managers and workers to work effectively. 4.3.1 Information technology: New information technologies have deep effect on the organizational structure. Information technology changes the methods of organizational structure. Information technology enables the organizational structure to connect the relationships electronically allowing them for communication and coordination. These days many companies are effectively using the information technology in innovative ways to make their organizational structure flexible.

5. LEADERSHIP: Leadership is one of the most important roles in all the organizations. No matter what one`s style of leadership is, The main key element of the efficient leadership is the POWER. This power of the leader has an impact on the others behaviours and enables them to act in some certain ways which HSBC can also compare and enhance its leadership powers. There are several types of power such as legitimate power, reward power, coercive, expert and referent power.

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LEGITIMATE POWER: Legitimate power is an authority that is possessed by a manager by virtue of his position in organization.

REWARD POWER: Reward power is the power and capability of a manager to give the rewards to the employees. COERCIVE POWER: Coercive power is the potentiality of a manager to punish others by suspending them etc.

EXPERT POWER: Expert power is the power which is stationed on some special skills, knowledge and adroitness that a leader possesses. REFERENT POWER: This type of power comes from the subordinate`s, staff and employees respect, fondness and sincerity of the leader.

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5.1LEADERSHIP MODELS: In this report we discuss about some of the models that are based on leadership like the TRAIT model, BEHAVIOUR model and CONTINGENCY model. First let us see about the trait model. Trait model and Behaviour model are the early approach to leadership. a) TRAIT MODEL: The trait model approach of leadership concentrates upon identifying the personal characteristics which account for the dominating leadership. Dominating or effective leaders may have certain characteristic qualities. HSBC seems to be following the trait model. HSBC plc held the global talent management process for the employees in order to attract the employees and staff. The issue is that many Asian countries lack the skill workers and making a shortage of the managers and technical people. So this led to difficulties in recruiting the qualified bankers in the local markets. At that time HSBC plc implemented this global talent management process. By this process, HR professionals visited all the countries and illuminated about the nomination and guidelines for the assessment criteria. They were given with data, interviews and 360 degree feedback in order to find the potential leaders and specialized people. This also enables the HR professionals to check their personality, confidence level, integrity and dominance. But these traits differ from person to person. Also traits are not only the major key for understanding the effectiveness of the leadership. Sometimes the leaders who are more effective may not possess all the traits of leadership. Sometimes some leaders may have all the all the trait characteristics even though they are not effective in leadership. This led to lack of consistency in leadership. This made the thought of behaviour model of leadership which we will see next.

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There are several types of traits in which some are explained as follows: TRAITS INTERPRETATION

INTELLIGENCE

This avails the managers to interpret the confused situations and in solving problems. This trait assists the managers to avoid acting in a selfish manner. This gives a level of confidence to deal the demands faced by them. This supports the managers to face the uncertainty.

MATURITY

HIGH ENERGY

TOLERANCE & STRESS

KNOWLEDGE & EXPERTISE

This trait involves in making right decision in expertise way. This helps the manager subordinates in difficulties. in influencing their

SELF CONFIDENCE

INTEGRITY & HONESTY

This trait involves the manager to behave in an ethical manner and for getting the employees trust and confidence.

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There are many traits which are similar to all the traits above that help in determining the leadership. But they are not consistent all the time.

b) BEHAVIOUR MODEL: Behaviour model mainly relates about two basic kinds of leaders behaviour. They are consideration and initiating structure.

CONSIDERATION: Leadership involve in consideration in which the leaders show their employees that they trust them, give respect and hold care towards them. HSBC considered rewards for their staff to encourage them. Consideration leadership managers truly take care of their subordinates, help them to feel elated while in job and enjoy their work performance. If the HSBC managers also engage in consideration closely to their employees by giving respect and care, their employees will feel joyful, enlightened and will have a good work community.

INITIATING STRUCTURE: Initiating structure model behaviour describes about the managers who put on to ensure that work given to their employees gets done in according to the time. This also engages the subordinates to perform jobs modestly. This helps the organization to go in
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efficient and effective way. HSBC plc if initiates a certain structure for the employees to follow the same structure then it will be followed by the employees. This includes in assigning tasks to their employees in group and individuals. Also teaching the subordinates in knowing what is expected from them. This helps the staff in understanding how to do the work, preparing the schedule, following rules and regulations to excel in the work they are doing. But by initiating structure might not look good for some employees as they feel uncomfortable while working and dominating them not to succeed. However people prefer consideration behaviour mostly because of its pleasing characteristics when compared to initiating structure as it should be followed promptly. Consideration and initiating structure are the autonomous leader behaviour. Leaders may have either one of these. One may be high in consideration and low in initiating structure and vice versa.

c) FIEDLER`S CONTINGENCY MODEL: Leadership relies upon the characteristics of the leader and the situation in which the leader is in. This model entitles about two basic leader types. 1. Relationship oriented. 2. Task oriented.

1. RELATIONSHIP ORIENTED: Relationship oriented leadership leaders are those who develop a healthy relationship with their subordinates and colleagues. This is a good quality of a leadership as this maintains a good relationship with the subordinates. This is used widely in most of the multinational companies which helps in getting the work done by
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subordinates. However relationship has a prominent role in leadership. This helps the HSBC managers to complete their work as if they use this relationship oriented leadership. This helps the organization in achieving the goals that are set as target. 2. TASK ORIENTED: This type of model is similar to that of initiating structure. Task oriented leadership ensures the subordinates in performing the work at high level. Task oriented leadership highlights on assigning the task to the subordinates and verifying the task assigned is whether completed and in time. Task oriented is commonly used for magnifying the skills of the subordinates and employees. Despite in general employees feel to have a relationship oriented type leadership in positive compared to the task oriented leadership. Both the relationship oriented and task oriented perform according to the situations. Leadership is a permanent characteristic which cannot be adopted from situations. Fiedler observed three important characteristics in leading situation. They are 1. Leader member relations. 2. Task structure. 3. Position power. Leader-member relations: This is a situation of subordinates trust, confidence, respect and loyalty towards the leader. Task structure: This situation states about the jobs are assigned and structured so that the employees know what to be done. Position power: This is a situation where leader hold the power of hiring, firing, promoting and all related matters.

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6. HUMAN RESOURCE MANAGEMENT: Human resource management is an essential part of an organization. They might be including current human resource needs and future human resource needs. Current human resource needs are for the present where as future human resource is for the future needs of the organization. HSBC while recruiting encourages the employees by giving them data sources, interviews and 360 degree feedback from which they identified the employees needed for future positions which is a future human resource needs. Demand forecast and supply forecast are also handled by the HRM. Demand forecast is situation where it estimates qualification and number of employees need. Supply forecast is the estimation in availability and supply of qualified workers.

Human resource planning is the most important strategy in an organization as it deals with many aspects. Thereafter is to determine recruitments and selection of employees. Job analysis is the method of identifying tasks, responsibilities and duties of jobs. Job analysis can be known in many ways like observing the current employees and by questionnaire of the position. 6.1 DEFINITIONS: Human resources management is the method of managing, recruiting, rewarding and development of the employees. HRM is a strategic approach of managing employment relations which emphasis that leveraging people capabilities is critical to achieving competitive advantage. This can be achieved through a distinctive set of integrated employment policies, programming and practices. (Bratton & Gold 2003)
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HRM refers to all those activities associated with management of employee relationships in the firm. ( Boxall & Purcell 2008:1) HRM is a distinctive approach to employment which seeks to achieve competitive advantages through the strategic development of a highly committed and capable workforce, using an array of cultural, structural and personal techniques. (Storey 2007:1) HSBC used good HRM policies and practices such as recruitment, rewards, training and development. But there also some changes required in their practices and policies for the success of organization. RECRUITMENT: Recruitment is the process where employees are selected individually for carrying out the specific goals and targets to be accomplished by the organization. Recruitment is an experience based activity done by the expatriates. The process of recruitment involves mainly three steps. 1. Requirement for staffing. 2. Attracting the candidates. 3. Selecting the employees from candidates. 1. Requirement for staffing: This includes the number of people needed and clears roles of each individual. Both these can be implemented using job analysis and personal characteristics. Job analysis can be done by splitting down the job for analyzing the components. Personal characteristics are the particularity that is suitable for fitting into the job. 2 Attracting candidates: This is the process of attracting the desired candidates suitable for the job through advertising, Agencies and consultancies. 3. Selection of employees from candidate: This is the final and crucial stage of recruitment process where the employees are selected in number of ways by means of selection tests, face to face interviews etc.

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REWARDS: Rewards are something either giving or receiving for behaviour which is very valuable. Rewards are given in many forms a follows Bonuses. Promotions. Increments. Extrinsic rewards (like paid holidays) etc. Moor head & griffin (1995) identified three messages in giving rewards. They are 1) For attracting staff. 2) For motivating staff. 3) Retaining staff. Compensation is a term widely used in rewarding employees. TRAINING & DEVELOPMENT: Training and development are the programmed systems for improvisation and development of staff for enabling them to meet the organization goals and capabilities at high level. HRM policies and practices will deal a lot of operations such as rewards, recruitment, management, training, development, performance appraisal, maintain employee relations etc.

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6.2 HRM MODELS: Now let us see some HRM models. I am defining three models i.e. I. II. III. General or Fombrun model. Harvard model. Michigan or Matching model.

a) General or Fombrun model:

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Fombrun model is one of the early models used in HRM policies and practices. HSBC can follow this method of HRM. This model has four functions in it. They are selection, appraisal, rewards and development. AS HSBC plc has conducted recruitment, rewards and development at that time, this model can help them in HRM policies and practices. SELECTION: Selection includes in matching the abrupt employee to the desired job within the organization. APPRAISAL: Appraisal is the measure of the performance management of the employee in organization. REWARDS: Rewards are one of the systems that bring organization success. Every company has to reward the employees in short-term and long-term.

DEVELOPMENT: This includes in developing the employees with merit able qualities in excelling the job they are in. This is a general basic model in HRM if followed by HSBC. This model defines only the basics in HRM that is recruitment, appraisal, rewards and development. This model is good for small firms as it is not prescribing other management policies and practices. b) HARVARD MODEL: Harvard model is first defined by the Harvard business school in 1980 and this model came into usage in the year 1984.

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Harvard model details about the stakeholders interests, situational factors, HRM policy choices, HR outcomes and long-term consequences. SITUATIONAL FACTORS STAKE HOLDER INTERESTS HRM POLICY & ISSUES Work force characteristics, management philosophy, labour market, task technology and social values. Share holders, management, government, community and unions. employee group,

Employee influence, HR flows, reward system, work system.

HR OUTCOMES LONG-TERM CONSEQUENCES

Commitment, competence, congruence, cost effectiveness. Individual wee being, organizational effectiveness, social well being.

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These are the terms in Harvard model. HSBC, if uses these model its HRM policies can be developed according to the organization. HSBC can follow this model for having a stable HRM policies and keeping them in practice.

c) MATCHING MODEL: Matching model is also called as the MICHIGAN MODEL. This model is based on strategies of the organization or firm.

Matching model defines to a certain strategies. The organization will holds some strategies that are set as compulsory. Like above in the figure the firm has set some strategies that have to be followed by the employees. By following this model HSBC can set some strategies which the employee has to follow in achieving the organizational goals and objectives. This will help the organization in following a strict HRM policies and practices. It also helps the organization to run in a systematic manner. However this model might not be abrupt in all the organizations. As some employees might feel that they are being insisted on their work by organization. So this may affect the employee work conditions.

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7. CONCLUSIONS: We are concluding that having a good organization structure, HSBC can achieve its organizational goals and targets when emerging to new countries. Also if the HSBC maintains managers possessing good leadership qualities will lead and play a prominent role in the development of organization. Human resource management (HRM) which is considered as a major part that involves in company`s development has to be effective so that company gains profits. HSBC can have good HRM policies and put them into practices in order to achieve all the targets and objectives of the company.

8. Recommendations: There are some recommendations for the HSBC Company by our evaluation. This might help HSBC in excelling their company`s organization structure, recruitment, rewards, training and development. Whenever the company is emerging into a market it can focus on market research and then proceed. Maximum keep away of cultural and social influences as they can pollute the company`s fame. Long-term rewards may de motivate the employees and also results in negative criticisms among the employee relations. Short term rewards will amplify the employees zeal to work with more interest. Investing large amount of money for training and development should be based on the employee characteristics. Treat all the employees in same manner. .

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REFERENCES:
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