HSBC: International Human Resource Management Strategies

Student ID:

Name of Institution:

Module Code:

Module Title:

Module Leader:

Date of Submission: Thursday, 29 November 2018

By

michieccah@gmail.com
 HSBC: International Human Resource Management Strategies

Table of Contents

Table of Contents ....................................................................................................... 2

Introduction ................................................................................................................ 3

Task 1 ........................................................................................................................ 3

Franchising ............................................................................................................. 3

Mergers and Acquisitions ........................................................................................ 5

Wholly owned subsidiaries ...................................................................................... 5

Developmental strategy .......................................................................................... 6

Task 2 ........................................................................................................................ 7

Reward and Compensation Systems ...................................................................... 7

Conclusion and Recommendations ............................................................................ 9

Works Cited.............................................................................................................. 11

2
 HSBC: International Human Resource Management Strategies

Introduction

The Hongkong and Shanghai Banking Corporation (HSBC) is a multinational and

financial service holding company. It was first established in 1865 as The Hong Kong

and Shanghai Bank. The firm was incorporated in 1866 as the Hongkong and

Shanghai Banking Corporation. In 1991, it was renamed to HSBC Holdings Plc. It

was founded by Thomas Sutherland and has its headquarters at Canada Square in

London (Staples, 2004)HSBC serves worldwide and offers services such as

insurance and finance, mortgage loans, retail and corporate banking, investment and

private banking, credit cards and wealth management. HSBC has more than 3800

offices located in more than 65 countries across Europe, Africa, North America, Asia

and South America. The organisation has expanded drastically over the years

because of strategic management as well as proper planning and proper human

resource management (Staples, 2004).

This paper will focus on the successful journey of the HSBC, and its strategic

management practices.it will also focus on the way HSBC rewards its employees as

well as focus on two countries in which it has had its roots.

Task 1

Franchising

Franchising is a form of business in which the franchisor (owner) of a service or

product gets distribution through dealers that are affiliated or popularly known as

franchisees (Staples, 2004) HSBC has had many years in the franchising business

as well as a lot of experience and understanding of the franchise in the banking

3
 HSBC: International Human Resource Management Strategies

industry dedicated franchise teams and many contacts. When HSBC adapted

franchising, it had the advantage of owning its brand name and associating it with

the services it offered, and this reduced the risk of the business failing and instead

lifted HSBC to greater heights, making it earn more profits than it previously did

(Staples, 2004). Franchising comes with operation manuals, bookkeeping systems,

accounting systems, administrative support and marketing guidelines. When HSBC

took up franchising, it saved costs as well as many other resources that would have

been used in developing these business systems and facilities (Staples,2004) and

therefore the implication is that franchising is an asset to the HSBC organisation.

HSBC, through franchising, understands that the best business is usually not about

the money that it invests or spends on the organisation, but it is the creation of

supportive and robust relationships between the organisation and its customers

(Edwards 2016). This is evident as HSBC has customers all over the world, meaning

that there is a good customer relationship.

This is possible through flexibility and consistency. It has made sure that the services

it offers are available whenever they are needed without any delays, and that the

franchisors offer services of high quality. HSBC has encouraged successful and

ethical franchising. This is through its sponsorship of the HSBC British Franchise

Association (BFA). It has organised the franchisor and franchisee of the year

awards. This has encouraged its franchisors and franchisees to work hard because

they are motivated, and they are aiming to get the reward as well. Franchising has

helped in developing the HSBC organisation to develop to its full potential, and it has

continued to build on that (Staples,2004). This happened through the provision of

finance packages that have been designed to meet the individual requirements of

the customers. Therefore, it is right to conclude that franchising has been a

4
 HSBC: International Human Resource Management Strategies

significant step in the HSBC organisation, and has helped to build a strong

relationship and build up profits for the organisation.

Mergers and Acquisitions

Merging is the combination of two companies to become one. Acquisition, on the

other hand, is buying and obtaining assets of a smaller business buy a large firm.

Mergers and acquisitions have proved to be a key tool in the implementation

(Schuler, 2015) of the HSBC corporate strategy since it first bought stake at the

Mercantile Bank and the British Bank of the Middle East in 1959. The mergers and

acquisitions had a great implication in that they played a key role in the expansion of

HSBC into new markets and products after the Second World War, and also played

an essential role in realising capital to be used in investment and returning to its

shareholders.

Wholly owned subsidiaries

In July 1992, HSBC fully owned the Midland Bank. This gave the organisation a

substantial market in the United Kingdom. However, this acquisition had conditions

that HSBC holdings should shift its headquarters from Hong Kong to London, which

it did. There have been major acquisitions by the HSBC in South America, examples

being the purchasing of the Banco Bamerindus in Brazil in 1997 and the acquisition

of Roberts SA in Argentina, 1997. In 1999, HSBC expanded its market when it

purchased the Republic National Bank of New York (Staples,2004). These are just

among the many banks that HSBC purchased and has been purchasing. The

mergers and acquisitions by HSBC have brought about unique opportunities.

Challenges have come along too. Solutions to problems have been arrived at very

easily through mergers and acquisitions. Mergers and acquisitions have enabled

HSBC to have control over many markets all over the world due to merged power.

5
 HSBC: International Human Resource Management Strategies

Acquisitions have made business easier as the organization has moved closer to the

people compared to how it would have carried out business if it did not have a

branch in a certain country. Therefore, Acquisition has enabled HSBC to conduct

business more appropriately and easily. It has also given the organization a

competitive advantage over other markets, and that is why HSBC is one of the

leading banking organizations in the whole world. Mergers and acquisitions have

also brought a great advantage especially in tax benefits (Edwards, p. 60).

Developmental strategy

HSBC has branches in China and the United Kingdom. It has been very successful

in these two countries because of the strategy it has been using. One of the

strategies that HSBC has been using is managing for growth strategy (Rees,2016),

which has enabled the organisation to develop more. The growth strategy is a way of

focusing on how the organization will expand. It has also helped to strengthen the

organisation. The company has set up objectives. However, its main objective is to

lead the banking and financial service, and it has used this strategy in China and the

UK to maintain the number one position in the market. The strategic HRM used by

HSBC has given it comprehensive and intense employee value. HSBC makes sure

that its employees are well paid and that their needs are taken care of. Employees

are taken through training that enables them to do their work according to how it is

supposed to be done. Therefore, the employees have a clear picture of what the

organisation requires and what is expected of them. The organisation has made

possible the implementation of relationship management between the customers and

the bank. This has enabled it to maintain good customer relationships in the UK and

China, as most of the population in both countries prefer HSBC banking services

6
 HSBC: International Human Resource Management Strategies

compared to others (Guest,1987) The organisation in both countries has ensured

that the demands and needs of the customers are taken care of. The HSBC

Company has used strategic management to ensure that the businesses in these

two countries bring profits to the organisation, especially at the local and root level

(Edwards, p. 88). Hence good reputation for HSBC.

The organisation has focused on risk and responsibility strategies. This has helped

to recognise accountability, especially when it comes to the customers. It always has

a way of being accountable for anything going wrong within the organisation. There

is a set principle of conducts that govern the HBSC organization. The employees are

made aware of the set of conducts during their induction so that they can be

accountable for their actions. With responsibility, work becomes done very quickly

and fast. It saves on time. Responsibility avoids recklessness, and it makes

employees do their work with zeal and with caution because there are consequences

that result from being irresponsible. HBSC does not entertain poor management. It

has strict rules and guidelines and employees who do not abide by organisational

rules and regulations are faced with consequences.

Task 2

Reward and Compensation Systems

A reward is something of value that is given to somebody after an act.

Compensation, however, is something that is given so as to cover for a loss or

hardship. HSBC has many expatriate employees who work around the clock to

ensure that the organisation is the best in the world and that services are offered at

their best. The matching model theory is evident here in that HSBC tries to reward its

employees, and this is a way to achieve its goals and objectives (Sparrow,2016).

7
 HSBC: International Human Resource Management Strategies

Expatriate employees are usually trained and educated on how to carry themselves

abroad. An expatriate employee is one who goes abroad alone or with his family on

behalf of the organisation. They are also encouraged to be fluent in different

languages so that they be able to communicate and create rapport with the

customers of the organisation in that country (Staples, 2004). Designing a reward

package for an expatriate employee has several complexities. First, the high taxes

and hefty living is one of the complexities. An employee might find themselves living

a challenging lifestyle because of the expensive life in a new country and this may

make lose morale at work compared to if they were working in their country. For the

calculation to work out, the employers can enlist the company services that are

usually willing to collect expatriate information. Healthcare is also a major issue that

is related to expatriate employees. This is because healthcare systems vary across

the world and the new country that the employee might be posted may have varying

health requirements. The destination is also a complexity that affects an expatriate’s

reward package. Some countries have hardships, and this makes the equalisation

process difficult and hard, especially when renewing the rewards. It also brings out

the universalistic theory of human resource. This theory aims at focusing on best

practice and high work performance (Wright, 1992) HSBC therefore rewards its

employees so that they can perform best.

HSBC offers reward practices in China and the UK. The employees are usually given

a competitive market pay that is satisfactory. This includes fixed pay allowance

pension and salary, and they do not vary with the performance of the employee. It

also offers benefits that vary with the local market. The organisation offers medical

insurance to its employees as well as life insurance (Armstrong, p. 289). It also

benefits its employees with relocation allowances. HSBC also has annual incentives

8
 HSBC: International Human Resource Management Strategies

whereby it has reward performances based on annual measures that are both

financial and non-financial. It also offers awards that vary with the performance

achievement. Several award events have been held in China and the UK including

the long-term incentive awards. Pre and post-grant performance measures are

taken. However, awards are usually subject to clawbacks, and they vary to an extent

to which performance is achieved. Awards are usually in shares and are usually

subject to a three-year performance period. Shareholding requirements usually align

with the interests of senior management and the interests of the shareholding

requirements (Delery,1996). This requirement is usually compulsory to all members

that are part of the senior management team. China has had focused employees,

primarily because the organisation was first founded in China. The United Kingdom

also has a major branch that has dedicated employees because of the rewards that

the organization offers them.

Conclusion and Recommendations

HSBC has a very strategic plan that has enabled it to be successful all over the

world. It is important to note that business strategy is fundamental to the success of

a business. For a firm to succeed, there has to be a management strategy as well as

a development strategy. It is also crucial for an organisation to find ways in which it

can reward its employees because this is what keeps the organisation in shape and

pushes for a successful one too.

Financial advantages come along with instigation of mergers together with

corporations, as they build tax shields that are stronger and this increase the

monetary advantage as well as the utilisation of tax benefits. M & A has also led to

the formation of economies of scale in HBSC. This has come about due to the

sharing of resources and services among the merges and the acquisition of those

9
 HSBC: International Human Resource Management Strategies

resources when they buy other companies which have enabled it to be successful

over those many years.

HSBC should adapt emerging technologies such as blockchain which is more

secure, cheaper and efficient. This can be done if the company invests on the expert

resources needed to enable overcome any future competition from cryptocurrencies.

It should also be noted that, the banking industry is losing billions of dollars due to

cybercrimes and by focusing on high skilled employees to secure its systems. HSBC

should also study the geopolitical factors to avoid any loses due to investment in

politically unstable territories to avoid the occurrences as in Second World War

scenarios.

10
 HSBC: International Human Resource Management Strategies

Works Cited

Staples, T., 2004. The HSBC History Wall. BUSINESS ARCHIVES, 87, p.31.

Delery, J.E. and Doty, D.H., 1996. Modes of theorising in strategic human resource

management: Tests of universalistic, contingency, and configurational performance

predictions. Academy of Management Journal, 39(4), pp.802-835.

Armstrong, M. (2009). Armstrong’s Handbook of Human Resource Management Practice.

(14th ed). London: Kogan Page. [Ch 8, 28, 29, 30 & 31

Brewster, C; Sparrow, P; Vernon, G & Houldsworth, E. (2016). International Human

Resource Management; 4thEdition; CIPD Chapter: 1

Delery, J.E., 1998. Issues of fit in strategic human resource management: Implications for

research. Human resource management review.

Edwards, T. & Rees, C. (2016). International HRM: Globalization, Head Start National

Systems & Multinational Companies; 3rd Ed; Pearson Chapter 1 & 2

Edwards, T. & Rees, C. (2016). International HRM: Globalization, Head Start National

Systems & Multinational Companies; 3rd Edition; Pearson Chapter 5 & 8

Tariq. I; Briscoe D.R; Schuler R.S (2015); International Human Resource Management;

Routledge. Chapter 3 & 4

Wright, P.M. and McMahan, G.C., 1992. Theoretical perspectives for strategic human

resource management. Journal of management, 18(2), pp.295-320.

Guest, D.E., 1987. Human resource management and industrial relations [1]. Journal of

management Studies, 24(5), pp.503-521.

11
 HSBC: International Human Resource Management Strategies

Wright, P.M. and Haggerty, J.J., 2005. Missing variables in theories of strategic human

resource management: Time, cause, and individuals. Management revue, pp.164-173.

Taylor, S., Beechler, S. and Napier, N., 1996. Toward an integrative model of strategic

international human resource management. Academy of Management review, 21(4), pp.959-

985.

12