Organization Behavior

Introduction

 Business strategies are continuously changing to meet the new and exciting challenges of today’s banking industries.  This ever-changing world is characterized by increasing global competition and advances in technology.  Emphasis is also shifting within the operations function to link it more clearly with the employees and its clients.

 The world is rapidly transforming itself into a single global economy, which is also referred as global village.  Markets once dominated by local or national companies are now vulnerable to competition from firms in all corners of the world.  Consequently, as companies expand their business to include foreign markets, so too must the business management function take a broader, more global perspective in order for companies to remain competitive, to survive and prosper in such a global marketplace companies must excel in more than one competitive dimension.

 Advances in technology in recent years also have a significant impact on the business management function.  Information technology (IT) now allows one to collect data on individual consumers. (Mintzberg, 1998) The increased use of automation and robotics has also permitted the business world to improve on the quality of service that these banks provide.  Automated teller machines (ATMs), which can provide costumers with a 24-hour service and a good example of technology being applied in service operations.

 HSBC is one of the largest banking institutions in the world.  Reports showed that at the end of December 2001, the total assets of the said company are US$696B with a shareholder’s equity of US$46B.

 This paper will be discussing the different management strategies that HSBC to keep up with the changing needs of its consumers and be abreast with globalization.  It will identify some technological advances that it is currently employing to improve the quality of service they provide to the general public.

HSBC Management and Resources

There are many ways of classifying human needs.  One way is to make a distinction between primary and secondary needs.  Primary needs are those that pertain to man’s very existence.  They are inherent, biological in nature, shared with the environment and include the bare necessities of life.  Secondary needs are also known as derived or social needs.  They pertain to things, which, although not essential to life like food and air are necessary to man’s general welfare.  This includes his fulfillment as a member of the human race.  

  Combs and Snygg (1959) reiterates that the fundamental need of man is preservation. 

Likewise, they added that man seeks enhancement of his phenomenal self.  The term “phenomenal self” refer to the individual, as he perceives himself in relation to his personal and psychological environment.  The same authors refer to this as man’s phenomenal field, by which they mean that part of a person’s total environment, which affects him.  They believe that one’s behavior depends upon the way he interprets his surrounding and the meaning it has on him.    Herbert Carroll (1955) has divided the basic needs into four categories.  These are physical security, emotional security, mastery and status.  The needs for physical and emotional security pertain to the preservation of one’s self.  The need for mastery and status pertain to its enhancement.  This need of mastery pertains to one’s feeling of success or achievement in a certain area. The need for status includes the desire for favorable attention and recognition. 

 In HSCBC, apart from its monetary benefits, provides their employees with programs that would enhance their skills and empower them to achieve more.  They provide them with formal skills trainings, which are specific to their line of work and essential to professional development.  They also allow rotational job opportunities by allowing qualified employees to undergo management-training programs.  Likewise, to constantly guide them as they pursue a career in the company, mentoring program is also provided.  In addition, for those who wish to pursue graduate programs that they need to be better in their field, HSBC offers a tuition fee reimbursement program.  The company believes that it is part of their thrust to allow their employees to grow and realize their dreams with them.

          As a company, HSBC recognizes that the costumers are their number one assets. 

Throughout the years of their continuous service, they have established a reputation of having a long-term relationship with their clients.  (Nelson, 1982) While it is true that the number of patrons HSBC are having is caused by it being an international bank, it cannot be denied that its ability to meet the banking needs of the public have earned their loyalty and trust.

 This is one of the highlight of the management style of HSBC; it capitalizes on its international appeal through its local operations.  It is known for providing costumers with readily accessible service and at the same time strengthening its power as an international financial institution.

 HSBC is able to manage its operations with great expertise that the resources including human resources, technology, and capital are well placed in the different areas of concentrations depending on its need.  (Noda, 1996)As such, it is able to maximize the potential of all its assets. 

It is the vision of this company to prioritize its management making it its greatest strength.  The ability of HSBC to maintain international status lies on its ability to balance its resources across the different economies.  It relies on their strategy known as “Managing for

Value”.  It has four key components namely:

1. To concentrate on delivering wealth management to key markets around the world.
2. To grow its commercial business.
3. To integrate corporate and investment banking service for HSBC’s largest costumers
4. To establish HSBC and the hexagon symbol as a global brands.

HSBC UK’s strategic planning and management

 The proper management of the operations of HSBC UK is concerned in the long term plan for determining how to utilize the major resources and assets of the bank so that there is a high degree of compatibility between these resources and the firm’s long term corporate strategy.  HSBC gives high premium to the value of its costumers.  Specifically, they believe that value should be added through the competitive priorities that are selected to support a given strategy.  According to Skinner (1974), there are four basic competitive priorities.  These are cost, quality, delivery and flexibility.

 Cost refers to the investment that the company is going to take in terms of the new service that it will be providing.  In a society that is practically driven by technology, additional cost is surely at hand.  Information technology on the other hand offers the advantage of accuracy of data and convenience for the consumer.  HSBC is one of the banks, which believes that costumer satisfaction can off set additional cost bring about by innovation.

 Quality is also a battle cry of all banks.  In this case, quality of service that is being provided is the top priority of management.  Its ability to be accessible and costumer friendly makes the costumers loyal patrons of the bank.  The efficient service that is being extended not only of the machine operated transactions but human resources as well.

 Delivery in this case is closely related to the quality of service that is being provided.  The service that is to be provided must be on time and at par with the high standards that HSBC have set for its self.

 Last but not the least is flexibility.  Flexibility, from the strategic perspective, refers to the ability of a company to offer a wide variety of products to its costumers. (Naisbiit, 1990)

  These four qualities are the basis of  HSBC UK initiatives of improving their service.  

Initiatives of HSBC UK towards Costumer Satisfaction

There are six major initiative that HSBC have started to improve the management of  their local branches in UK to meet the costumer demands.  They are Customer service centers (CSCs), investment on British Interactive Broadcasting (BIB), TV banking, in-store banking, changing the general model of General Insurance and Clearwater. 

     The development of the costumer service centers (CSC) was developed to have telephone operators answer the queries of costumer from remote places.  This strategy was able to reduce the manpower and thus was able to reduce its operation costs.  It focuses on the exploitation of the resources in this case manpower from the remote places.  It is technology based, as there is a need for a centralized program so that accurate information about the costumers is being disseminated and tailored depending on their current needs. This initiative is skill and knowledge based.   This also has a lot of capital investment in it that is why its decision to be followed through is from the top management to the bottom.  Based on the researches conducted, this initiative is highly successful.

       The British Interactive Broadcasting (BIB) on the other hand was envisioned to have an interactive service using the television as its main proponent.  The British Interactive Broadcasting uses the television to give services that is sponsored by the bank such as home TV shopping, mail services and bank account management.  Currently, this initiative of HSBC has many shareholders namely: (Menuhin, 2008)

1. British Sky Broadcasting, (32.5%), a satellite TV company
2. British Telecom (BT) (32.5%) telephone national carrier
3. Matsushita (15%), a Japanese manufacturer of electronics
4. HSBC-UK (15%)

This initiative of HSBC aims to explore the different possibilities of the television as  medium of providing banking services.  This is also product based. In addition, dependent on the skills and knowledge.  A large capital is needed to start up this operation.  This also needs a high capital investment and its management control is from top to bottom.  This has also proven successful.  

 The third initiative is known as TV banking.  From the name itself, it is using TV as a platform for delivering the different banking services of the client.  The technology behind this innovation was developed by the same group, which led the propagation of BIB. This initiative is also exploration based.  In terms of the capital investment, relatively it is moderate.  Since innovation in the technology is being enhanced in this program, decision comes from the top management and implemented by the managers.  This has proven to be successful and effective among its clients. This initiative is also skill and knowledge dependent.

 The method of in-store banking main purpose is to provide banking service within the confines of the different supermarkets outlets.  This is to allow the costumers to have access to its banking needs seven times a week and almost 78 hours depending on the operating hours of the said bank.  According to the study, there are three pivotal advantages that HSBC have in utilizing this strategy: (Menuhim, 2008 )

1. Cost efficiency in terms of the set-up costs compared with the cost of opening branches, and smaller operating costs.
   1. the ability to target new costumers since most shoppers were loyal to the retailers
   1. The ability to test and develop new bank products and services in a secure and well target environment.

   This strategy utilizes the exploration of the different possibilities of utilizing the available resources at hand.  It also maximizes the nature of the organization and its reputation.  The capital investment on this venture is moderate as there is no additional technology needed and management still comes from the top.

 Changing the business model for general insurance is generally in relation to the existing partnership of the bank and the different insurance companies.  There is now an increase type of insurance that is being offered from the mobile phones, home, travel insurance and others.  During the earlier days of the banking industry, the bank only serves as the agent of the insurance company.  It functions by buying some of the products of the company and selling it to the patrons at a higher price.  For HSBC UK, it has now initiated the system of assigning the bank’s customer administration to help manage the costumer.  When a claim is to be settled, the bank is the one, which directly goes to the insurance company to receive the claims.  This sudden change in role of the banks wants to strengthen the partnership between the bank and the insurance company.

 This method utilizes exploration and is product based.  It needs only a small investment and its direction is the opposite of the earlier mentioned, from the bottom to the top.

 Last but not the least of its initiatives is the Clearwater project. Clearwater is an organizational strategy that aims to have a noticeable margin among its competitors.  This initiative also aims to make sure that HSBC UK would be better compared to its other competitors.  This program utilizes the exploitation of its resources.  It also focuses on the organization per se and is decisions will be from middle management to the top. 

 The effort of the bank is to be able to sustain the needs of the costumer and service satisfaction.  In this case, the following initiatives would be taken into effect through a series of steps.  This management style of HSBC UK has proven to both beneficial and proactive in nature.    It is imperative that they apply micro strategy, which is defined as 

“The research which involves the study of strategic issues in terms of organizational processes at the level of individual and group interaction.  It is likely to involve analysis which spans levels: the individual interaction, the organizational level and the level of the organizational context” (Johnson and Bowen, 1999: p.4-5)

 Thus, there is a need to ensure that whatever plans the it will initiate it will come from a well developed plan.  The innovations in the banking management of HSBC UK have been formulated in three stages namely, the idea generation, the concept development and the implementation.  These stages have its merits and have important learnings for the HSBC UK company.   

           Communication flows in various directions.  There are three directions, namely

downward, upward and horizontal.  Each of these occurs in an organization.  The direction of the communication is directly related to the position of an individual in the business hierarchy.

(Limaye, 1994)

 Downward communication flow form people at higher level to those at the lower level.  This includes instruction, speeches, and meetings.  In some cases however, there organization still experiences loss of information or its distortion as it comes down from the chain of command.  This is the reason why feedback system is essential in finding out whether the information was received properly. (Raggins, 1994)  The downward communication however to the different levels of organization is time consuming.

 Upward communication flows from the subordinated to superiors and continues up the organizational hierarchy.  Upward communication is non-directive and usually found in participative, consultative and democratic organizational environment.  Examples of upward communication include suggestion system, appeal and grievance procedure, complaint systems, and counseling sessions. (Ragin, 1972)

 The horizontal form of communication happens among personnel of the same organizational level.  This kind of communication speeds information flow improves understanding and coordinates efforts to achieve organizational objectives.

                In the case of HSBC UK, the model being used is the downward and upward

communication, depending on the stage of the development.  

 The order of the communication of the project development is as follows:  The senior manager is the one responsible in initiating the project.  Once they have established the pros and the cons of the program, they seek the support of the top team especially on the funding of the projects.  The top team on the other hand evaluates the viability of the program depending on its feasibility and the reputation of the ones who are promulgating it.  Once they see that it is have much potential, they now help the senior managers to call on the people working in the bank whose main task is to be agents of change.  Once the pivotal roles are assigned, the senior manager now recruits different members from the different departments.  At this point, they are now able to assign who will be responsible for the different tasks.  Once the projects have been finalized, the implementation through the two-layer management is now ready.  

 In the two-layer management that is being employed in HSBC UK, two teams are formed to implement the different programs of the company.  The first is what is referred to as the steering group.  The steering committee is being headed by the project sponsor.  This committee is responsible in the dissemination of important information of the project, assigning the financials and other tasks.  That the steering committee is responsible namely in three major roles:

1. managerial supervision
2. strategic direction
3. problem solving role

Under the steering committee comes the working committee. The working committee can  be further divided depending on the needs and the project.  If the project is more complicated such as the TV banking because workers that are more skilled are needed, the working committee can further be divided into clusters.  The working committee is then headed by the project manager.  This scheme is depicted in the next figure wherein the solid arrows represent the chain of command in the company.

Conclusion

 HSBC UK, with its efforts to be a leader in the banking industry has employed different management techniques to provide quality and innovative service to its clients.  These initiatives include, Customer Service Centers (CSC), investments in British Interactive Banking (BIB), TV Banking, In-store banking, changing the Business model of General Insurance and Clearwater projects.  These projects have undergone three phases namely the idea formulation, concept development and implementation.  Throughout the course of this development, key players take part in each phase.  The supervisors are the ones who initiate the project.  The top team then decides whether there is a future in these projects.  Once approved, agents of change and the other members of the different departments take charge of implementing the new program.  The program is then implemented using a two layered management scheme.

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