Human Resource Management (HRM) is a key executive task that assists companies to hire, pick, train, develop and supervise and retrench its associates or employees whenever needed. So, HRM is managing the personnel needs of those in a company. HRM denotes or means procedures, tasks, and activities that intended and agreed out in order to make the most of both employee and the company efficiency.
So, HRM is about the employees reach in management. Through HRM an organization tries to find out the future staffing needs of it. Since companies cannot work its own and due to the fact that people are integral part of it, HRM plays a very key role in the realisation of organizational objectives. This is correct, in any kind of the firm or companies.
Now for the discussion purpose the organization we refer here is a multinational bank known as HSBC. It the biggest bank in the world in 2009 as per a Forbes magazine report. It operates in most countries in the world. It has listed in London, NewYork, HongKong, Paris and Bermuda Stock exchanges. It has more than 330,000 employees all over the world. It also operates almost all part of the UK. So it would be ideal for us to go through the HRM aspects of this bank.
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Following are the main HRM functional areas.
Management /Decision making purposes of HRM.
Plan: This means research and plan the manpower of the organization, labour market conditions, availability of labours, and foresee the human resource needs of the firm.
Organize: All the human resource is for the realization of the firm's common goal. So it is another function of the HRM
Staffing: This means staff have to be selected and recruited.
Direction: When a new employee comes to the organization he or she is not aware of the laws, rules etc... prevailing there. So another HRM function is to direct them towards all these.
Control: All the actions of the employees working in a particular organization should be for the achievement of the common goal of that organization. If any one is not acting towards the common goal their activity is to be controlled
Running Functions HRM
Acquire: This means from planning to retirement
Develop: emoloyees have to train and develop their skills. They need a plan for the development of their career too.
Reward: We all work for salary or other kind of compensation. This function involves salary, wage and other monetary forms of payments to employees
Incorporation: Always manpower needs to be incorporated with other resources. This is another function of HRM
Protection: All employees working in a firm needs to be protected against threat etc... from out side.HRM should have the capacity to do this.
Severance: In all firms separation cannot be avoided. This can be in the form of resignation, sacking, firing, medical issues, death etc... Whatever the reason HRM has to involve in this.
Critically examine three main HRM functional areas or activities in the organisation.
So let us take 3 most important functional areas from the above which are the most important in HSBC bank viz, Strategic HRM, Performance management and Job analysis.
1). Strategic HR Management: HSBC is an organization which works all over the world. So a mere HR activity will not give solutions to the vast issues face by such an organization. There come the Strategic Human Resource (Strategic HR) Management.
In HSBC, strategic HRM plays a very important role in the goal achievement of HSBC. It has around 330,000 employees around the world. So a traditional way of HRM doesn't work or align for the achieving its goal.
Strategic HR management is a multifaceted and difficult process in any organization. Different writers and authors have different opinion regarding the term and how it associated to the core objective of the businesses. The part below1 covers a variety of views to HRM, and strategic HRM.
Strategic HRM and business strategy of HSBC.
A broad H R Strategy cater a significant part in the accomplishment of a firm's total strategic goals and obviously demonstrates that the HR function completely recognizes the way in which the company is going. A good human resource Strategy will also support other explicit strategic goals carry out by other functional departments of the organization. For e.g. Marketing or finance
Always on Time
Marked to Standard
In its fundamental nature, a Human Resource strategy should aim to catch "the people element" of what a firm's target in the long or medium term, making sure the following,
The company got right people in place
The firm will have right mix of skills
Those who work their shows right manner and activities and
Its workforce is developed in a correct manner
In the case of HSBC the strategic human resource management and environmental pressures can be shown as following.
Source: Fombrun et al (1984)
In HSBC people are always the biggest asset. The elusive value of this great corporation, which smear on those who are its workers, are receiving applauds from everyone and all corners, and it is in general now established that this has effects for the bank's (or for that matter any organization's) long term sustained performance.
Through Strategic HRM, HSBC gives the following commitment to its employees or it achieves following objectives.
agree to recognition, prioritization and study of opportunities.
Giving a clear view of problems to the management
Make room for better coordination and control
Reduces or limit the bad effect of a change or difficult situation.
Employees will understand that main organizational decisions are well supported to achieve the common goal of organization.
Helps the firm to allocate the scarce resource of time and other resources in a correct way.
2). Performance Management: This is another functional area of HRM. In HSBC Performance management is a process oriented function. Supervisors and subordinates together determine their KPAs. Education, acknowledgment and a system of advice and a chance give their opinions, give employees an occasion and opening to advance in their work area and excel.
Performance management is a holistic process which brings many factors together and, which at last helps to make a winning human resource management.
In their book, Armstrong and Baron5 explain performance management as a tool that helps an organization to direct its teams and individuals successfully and thus achieves the common organizational goal. So, it gives a clear idea to the people what are the job they have to do in order to achieve the common goal, the methods to do it and the reward for such work.
HSBC is a true winner in all field of its business. This is achieved through the following. So the objectives of the performance management in HSBC are as follows.
1).Performance planning and review . This make sure that the individual goals of employees are always connected to the group goals of HSBC and both needs are well met. The advantage here is the subordinate can go and meet the supervisor and explain his or her plans and goals and HSBC will help them to achieve these if these are helpful for a career development. In this way both employee and employer meets their goals
2.) Development planning and review : HSBC is in all sense a multi national bank. So through this it ensures that the much scarce management resource is developed through out it group and if needed move without boundaries.
3).Job Analysis: This is another functional area of HRM. It is a practice of grouping and learning the data pertaining to operations and responsibilities to a particular job. After effects of this are 'Job Description' and 'Job Specifications'. It is a common method that use by HR department to regulate and formulate the task and specifications in a job.
The following are the objectives of this function in HSBC.
Human Resource Planning (HRP): HRP involves recruitment, selection, rewards etc.. So Job analysis helps HSBC to do a correct HRP
Selection and Recruitment: To understand the manpower requirement of a firm is essential for selection and recruitment. Each and every work should have a right skilled person. Sometimes company has to do the recruitment from outside. In this case also job analysis helps
Development of employees: Without a job analysis the company cannot do a training program for its employees. Because it doesn't know what is to be imparted to them
Evaluation of job: Different jobs will have different relative worth. To determine this relative worthiness job analysis will hel.
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Reward/ Wages: Different jobs always get different pay levels. Again without a job analysis its difficult to determine the reward and salary system
Appraisal management: At the time of doing the reviews regarding performance job analysis will act as a basic way of path to the supervisors and managers.
Health issues: Most of the factory and industry works need specific safety and security measures. This is for the best interest of the employee and the employer. A job analysis helps the company and its managers to have a guide on this issue.
We are going to discuss 2 important HRM models as follows which is using at HSBC among other models.
1) The Matching model of HRM:
It is developed by Michigan business school in the US. It spotlights on the source aspect of work forces. This model stresses expenditure by way of 'number of people and keeps tight control with the management. Here the task to run the number of headcount in a cost effective way.,
It consists of 4 standard procedures as follows.
The Matching model of HRM can be shown as follows.
Source: Beer et al (1984)
Significance of matching model of HRM.
In this model the view point is that people are to be managed exactly like any other resources. For e.g. money or machine. This means it has a very narrow humanistic approach to the employees.It also says that a firm control should be put on the employees.This model also known as best-fit' approach to HR management. When it come to reality the HR strategy of a firm will be according to the overall business strategy of a firm. Means HR strategy alone will not have a stand of its own. Or it will be suppressed to the overall objective of profit maximisation or sales improvement etc... As far as possible HR needs to be proactive rather than reactive. But here under this model HR activity reduces to reactive only.
But in my opinion to an extent this particular model needed to win the situation. This may true especially at the lower rung of the organization. Sometimes without watching carefully or have a close look what they are doing it may be difficult to achieve the desired result.
2) Harvard Frame work: This is another HRM Model which is using in the HSBC. It can be shown as follows.
Source: Beer et al (1984)
Significance of Harvard model in HSBC.
We can see that the HBS has made the single most dominant framework of human resource management. This framework depicts a company's workers are resources. But, there is a difference. Basically there is a different way of managing human capital from other capital. The emphasis is on the human aspect of the workforce. This particular way of thought actually came from the influential Japanese companies after the Second World War. In an organization there are many stake holders. But arguably the most important are the workforce of a company. Without that it can not sustain for even a single moment. Employees have their own wants and issues along with other stakeholders, for e.g. government or society. So the HRM should be in a position to recognize those needs wants and issues and should be with the employees at a time of their necessity.
In my view this is the correct model of HRM, which not only HSBC but all the organization has to follow. Because it is ultimately the people who working or employed there makes the difference. In the case of HSBC, it gives the paramount important to the aspect of human capital. And it is not a practice it started today or yesterday. For long time this is the culture in that multi national bank. So through a successful HRM model like the Harvard model the people employed, government, society, customers and finally the company itself reaps enough reward in the form of profit.
HR Planning and Development
HUMAN RESOURCE PLANNING (H R P)
HRP is a tool and technique of foreseeing tomorrows workforce requirement of an organization. In an organization workforce will move or deplete on a continuous basis due to different reasons. HRP is an essential process and method in each and every organization because people are needed to attain the organizational objectives at all the levels. HRP is a permanent function in any organization, because due many reasons man power (fresh or additional) needed to organizations on a permanent basis. It also comprises an approximate calculation of how many people needed for the particular period etc....
HRP System comprises the below functions.
Environment of the organization
What is business objectives
Predicting the HR for future
Calculate the future workforce and where it comes from
As per the demand the company has to find the source of the human capital
On the basis of above an HRP system can be shown as follows.
Shortage of Manpower
Manpower Supply Assessment
Control & Manpower Evaluation
Goals and objectives of the firm:
A firm's overall goal and its objectives will give a clear idea about the requirement of staff needs in the future. For e.g. if a company plan to open a new branch in a new country that company probably need a local manager and other professionals. The organizations policies also play a vital role in HRP. For e.g. some companies have a tradition of promoting internal candidates to the key roles or vice versa.
In simple we can say that the HRP of an organization can be determined by some of the below policies of an organisation
Recruitment- External or internal
Employee development plans
Is there any trade union issues or obstacles
Is the company needs to be automated
Is there good employees as per the needs of the company available and are the flexible?
Some of the HRP methods used in HSBC is as follows.
There are three main methods use in HRP in case of HSBC. Below are they.
1) Trend Analysis:
In this method, the company of firm analyse a number of past years trend in Human resource. For example in HSBC it takes the figures of attrition and labour turn over in to account along with how many staff has joined in an year. These data, the company keeps for around 10 years. Then there are other factors which plays important role in the trend analysis like the economic situation, market growth, competitive advantage, growth of competitor etc... Then as per the situation in the market the company with the backing up of the data forecasts the number of people required in different functions usually when it makes the budget.
2). Delphi Technique:
The Delphi technique has been described as 'the technique of configuring a group contacting system so that the procedure is successful in permitting a bunch of people, in total, to deal with a compound and difficult issue. It originated during the start of the cold war in 1950s by famous US arms maker Rand Corp., tries to identify how the former USSR attack the industries in US and how many atom bombs are in need to make a precise intensity of collision on Americas military capacity. So HSBC, Delphi method takes a group of individuals who will usually expert in the field of HR and ask them to formulate a strategy for the next year or for some years. This group generally ascertain the general banking and financial market and industry as a whole and gives it feedback on other bank's strategy to HSBC.
3). Supply Analysis:
Current Human Resources of company: Each and every individual need a particular set of skills to achieve their and organizational objective. Through an HR audit we will come to know the capability, skill etc of the present workforce. The present workforce in any organisation can be categorised as two on the basis of the skills they have. They are routine skill inventory and management capability of employees.
1). Skill inventory would include the following;
previous work history
If they have any favouritism.
2.)Managerial capability are following:
Are they promotable
Is there any career development plan
How many people reports to him and the types of those
Is there any budgetary responsibility
Is there any managerial experience
Following is an example of an HRP model for a new branch opening by HSBC. This is a combination of the 3 models described above.
Effectiveness of HRP methods in HSBC.
All the 3 methods described above are well used in HSBC to plan and control the Human Resource. For e.g. without trend analysis HSBC can't forecast how many employees are needed for a particular period.
In Delphi method: - In Delphi method, the company says or asks a group of experts their opinion about a particular job or a group of job or their view about jobs. In this way HSBC gets expert opinion about the jobs and future job requirements.
In the Supply analysis HSBC sees its internal and external supply and take inventories of their skills. In this way the bank can keep a record of the skills, experience and knowledge required for effective and efficient working of the company and the skills for the job.
In this task we are going to see how the performance appraisal in an organisation takes place and how employees' performance is monitored.
Performance appraisal can be described as a review of employees performance on an annual basis or a pre determined basis as per the pre established guide lines of the company. This is usually done in a procedural way. The aim of performance management or appraisal is to ensure that workers attitude, and behaviour and goals are well connected with the common goal of organizational goal achievement.
Performance appraisal is a technique that will improve the total development of the workforce in the organization . In case of HSBC, the performances of employees are compared with a number of pre established foundations. They are as follows
Common personal traits like employees proactivity, ability to lead, are they dependant or independent during and able to work in a team environment etc...
Additional to the above Personal traits there are professional qualities like skills, awareness in the job, dynamism etc.. also monitored
The factors mentioned above are just a general guide line. Depending on the geography and the region this could vary and new measurements could come. Means this is not a fixed one rather dynamic in nature.
In case of HSBC, performance appraisal is a process which includes the following.
Goal setting and benchmark performance settings for the individual.
Create a suitable performance system. This is due to the fact that various levels of workforce needs different appraisal system
Face to face interviews.
Measure and document the performance of employees
Keep the information from this activity for suitable purpose. For e.g. training, development etc
Through the performance appraisal company can recognize other area of interest for the employees.
Also it helps in the training, development and promotion its workforce
Reward systems periodically needs overhaul or reviews. So a competent PA system helps to review the Performance appraisal wherever needed.
Tools or ways of Performance Appraisal
There are number of ways or technique or tools of performance appraisal. All these measures and techniques are devised to measure the quality and quantity side of the job.
Broadly in HSBC all these techniques are generally divided in to two categories as follows
Forced Distribution Method:
In big corporations one of the man issue caused by PA systems are the comparative assessment affinity of the person who does the appraisal. So the effect is that some of the appraisers and very soft and others are too hard. This creates a problem for the employees. But by using force distribution method we can avoid this issues. In this method there will be a pre established relative rating for all the workforce from good to bad. They classify employees as follows.
15% excellent- 25 percent - good ,40 percent average etc....
10% 20% 40% 20% 10%
Unsat. Below Avg. Average Good Excellent
Critical Incidents Method: In this method the managers of employees note the critical incidents occurs during the worktime.This critical incident could be good or bad. Managers document those incidents whenever they happens.
Advantage: All the facts and points about an employee is in front of the manager at the time of appraisal. All facts are well documented. Control is easy.
Disadvantage: If the manager or supervisor takes the bad incidents only there will be a huge problem. This could lead to ruining of employee career.
Field Review Method: Under Field Review technique usually the appraisal of employees are done by those who are not in their own department. In normal cases the appraisers come from the main office of the company. This particular method is using at executive levels in companies that has activities in many geographies. Advantages - Since an outside is doing the appraisal favouritism can be avoided.This is also helpful to promote staff at the managerial level. Disadvantages - The person who is coming from outside is not known to the employee and he is not aware of what the employee has done for the past year. This means the facts and figures regarding that employee is not available to the appraiser.
Self Appraisal: In this method the company gives the right to an employee to assess him or her. Under this the management tell employees to do their assessment based on the past one year performance. In this there will be an evaluation form and the employee will be asked to fill that. Then he discuss this with his manager during the performance review.
Futuristic/ Modern Techniques
Management By Objectives (MBO): It is actually a management technique. Under this the goals are being set together by the manager and his subordinates. They review it regularly and also give monetary benefit as per the improvement or achievement. And they regularly monitor and evaluate the performance towards the goal. This means there will be a pre determined set of goals and employees working towards to achieve those. Advantage: Employees will have a clear idea of what he has to do to achieve the larger common organizational goal. It makes everything visible to managers and subordinates.
Disadvantage: Managers may give importance to the tactical goals of the company.
Psychological Appraisals: Under this method the aim is to measure the futuristic performance of an employee rather than what happen already. Psychological assessment may be a part of this. Through this method the company actually finds bright and good prospects for the future needs and wants of the company. This can be particularly useful in finding out future managerial positions.
360-Degree Feedback: Under this method reviews and feedback is obtained from all the category of people they interact with. The category includes the managers, subordinates, creditors, suppliers, financial institutions, and an employee himself. So if the customer has anything to say he will get an opportunity to express that. Like this all category of people that employee interact with, get an opportunity and chance to assess his work. On the other hand it is a time consuming process. Because one has to wait till he gets views from all the corners mentioned above.
For HSBC the performance appraisal methods and monitoring methods described above are highly effective. Many points in favour of this can be shown. Some of the main points are as follow.
1). It has out grown Citi group and became the number one financial and banking institution in the world. HSBC has more number of employees than anyone in the banking and the financial sector.
2).Unlike its U.S and European counter parts HSBC has not been affected by the recent Global recession. This is due to the prudent approach of the company executives to concentrate on the business in emerging economies.
Even though, HSBC has good measures and methods of Performance appraisal system, on the global or the national level if they can address the following issues its current system can be improved further. That means to make improvements to the current system of performance management HSBC can think of implementing the following suggestion in to their system.
Rectify the problems in the existing system
The basis of PA system should have a correct definition.
consistency of assessment
skilled appraisers so that partiality can be avoided.
The foundation of PA system must be job analysis
The information using in PA system should be able to substantiate in case of need
Absolutely there would not be any inequities on sex, race, colour, language etc....