Hsbc Bank – Organisational St Essay Example
Hsbc Bank – Organisational St Essay Example

Hsbc Bank – Organisational St Essay Example

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  • Published: April 28, 2017
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HSBC is a prominent global banking and financial services institution based in Canary Wharf, London, United Kingdom. With 7,500 offices spanning across Europe, the Asia-Pacific region, the Americas, the Middle East and Africa, HSBC operates in 87 countries and caters to over 100 million individuals.

HSBC Holdings plc, established in 1865 as The Hongkong and Shanghai Banking Corporation Limited, has a wide range of shareholders consisting of more than 221,000 individuals from 127 countries. As of June 30, 2010, the company's total assets amounted to $2.418 trillion. HSBC Holdings plc shares are listed on the New York Stock Exchange as American Depositary Receipts (ADRs). The company offers various services including Personal Financial Services, Commercial Banking, Global Banking and Markets, and Global Private Banking with the goal of promoting trade between Europe, India, and China

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The establishment of the company in Hong Kong in March 1865 and its subsequent branch opening in Shanghai were driven by the need for local banking facilities. These moves led to rapid expansion, with branches being opened in Europe and North America. Over time, HSBC evolved from a regional bank into a global financial services organization.

HSBC's management implemented a strategic approach known as the 'three legged stool,' which focused on major markets in the Asia Pacific region, the US, and the UK. The acquisition of Marine Midland Bank marked the achievement of the second leg of this strategy. As a result, HSBC aimed to replicate this success through an acquisition in the UK.

In 1987, Midland Bank became the center of attention as HSBC acquired a 14.9% stake. HSBC further solidified its position by establishing HSBC Holdings plc in 1991 and subsequently making

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recommended offer to acquire full ownership of Midland in July 1992. This completed the third step of their expansion plan. The acquisition of Midland Bank resulted in HSBC relocating its headquarters to London. Expanding its presence in both developed and emerging markets, HSBC continued to grow through strategic acquisitions. In 1997, they made purchases in Argentina and Brazil, while in 1999, they added the Republic New York Corporation to their portfolio.

In November 1998, HSBC made an announcement that it would use a unified brand worldwide, incorporating the HSBC name and hexagon symbol. The goal was to increase recognition of HSBC by customers, shareholders, and staff globally. In recent years, HSBC has refocused on its origins and has expanded its business in China through both organic growth and strategic partnerships. Despite the economic and market uncertainties of the past, HSBC's diversification and commitment to financial strength and stability have proven beneficial. Today, HSBC is well-equipped to navigate an unpredictable world. The term "horizontal differentiation" in HSBC refers to the separation of tasks across various units like Risk Management, Financial Control, HTS, Human Resources, Commercial Banking, Global Banking and Markets, Marketing, Personal Services, and Branches Network.

The organization differentiates its members based on the tasks they perform, requiring specific and specialized knowledge and skills. Job specialization, or the division of labor, is utilized to achieve this. At HSBC, employees are divided into groups of specialists with varying skills, knowledge, and areas of responsibility.

Due to its extensive horizontal differentiation, the organization has numerous management layers. This in turn results in considerable vertical differentiation and a restricted span of control to ensure efficient supervision by managers. Additionally, the organization's complexity

is heightened by its unique dispersion, encompassing the global distribution of HSBC's offices, assets, and personnel.

When an organization's operations are spread over a wide area, the special dispersion is high. HSBC operates 7,500 offices in 87 countries and territories across Europe, the Asia-Pacific region, the Americas, the Middle East, and Africa, resulting in an exceptionally high level of special dispersion. Consequently, managing the organization requires more time and effort, leading to increased costs.

HSBC has a high degree of formalization regarding how standardized jobs and procedures are within the organization.

The company strictly formalizes its jobs, with employees adopting specific values and standards of behavior. This formalization is achieved through several techniques used by the organization:
1. The selection process evaluates a person's professional skills and experience in relation to the company's values and attitudes.
2. Role requirements are well-defined and explicit, ensuring employees are aware of their tasks.
3. Employees are expected to follow strict rules, regulations, procedures, and policies when making decisions.
4. Socialization involves adapting to the organization's values, norms, and expected behavior.
5. Training acquaints employees with the history, philosophy, rules, and policies of the organization, aiming to unify member behaviors.
6. Rituals are used to demonstrate employees' trustworthiness and loyalty to the organization.Centralization in an organization pertains to the concentration of decision-making power at one central point, typically carried out by top management. HSBC is an example of a centralized organization, where the top layer of management holds the responsibility for decision-making, following a hierarchical structure. HSBC implements centralized management by utilizing GDC's PC-based network management software. This software operates from the Global Data Network control Centre (GDNCC), located in HSBC's innovatively designed Head Office at 1

Queen's Road Central in Hong Kong.

The entire network of HSBC can be administered from Buffalo, London, or Hong Kong in the event of a disaster or when decision making is necessary. This includes using the same corporate procedures within minutes. The company has a programmed, individual, and informal coordination process that integrates the objectives and activities of its separate units to achieve better organizational efficiency. The coordination between individuals and groups within HSBC is crucial for its success. Based on the structure of HSBC, we can conclude that it operates as a machine bureaucracy where standardization is key to organizational effectiveness.

HSBC operates using a standardized and formalized system, centralized rules, and regulations. The company's tasks are divided into functional departments that follow a hierarchical chain of command for decision-making. Employee work is standardized across the entire organization. HSBC has a complex group structure, consisting of various legal entities wholly or partially owned by HSBC Holdings plc. It is worth noting that HSBC's board of directors comprises both executive and non-executive directors to ensure a balanced structure.

HSBC Holdings plc. has a total of 19 Directors, with 3 executive Directors and 16 non-executive directors. The board comprises individuals from 5 nationalities, including 4 women. Independence is crucial for most of the non-executive directors who have the responsibility of overseeing the Company's operations and ensuring efficient utilization of its assets. All Directors must be elected by shareholders at the Annual General Meeting after their appointment and are subject to re-election every three years.

As per regulations, the board acts as a unified entity and is unable to directly execute its policies or decisions. It must instead designate individuals to

carry out these tasks.

Annual evaluations are conducted for both the Board and individual Directors. The Board of Directors is divided into committees, which derive their authority from the Board and report back to it. The Board maintains responsibility for matters assigned to the Committees.

The HSBC Board committees, namely the Group management board, Audit Committee, Remuneration Committee, Nomination Committee, Corporate Sustainability Committee, and Group Risk Committee Strategy, play a crucial role in the company's operations. HSBC aims to be at the forefront of the global financial services industry by cultivating a sales and marketing culture that is both superior and ethical. The strategy employed by HSBC centers on delivering shareholders a greater return on investment than its competitors in the financial services sector. With its headquarters situated in London and 7 other locations worldwide, HSBC functions as a global bank with an extensive international network.

HSBC has a presence in 87 countries and territories across Europe, the Asia-Pacific region, America, the Middle East, and Africa, with 500 offices. As a bank dealing with substantial amounts of money, HSBC places importance on maintaining stability within its structure. To achieve this goal, the bank utilizes centralized control and decision-making processes and an intricate formal hierarchy for effective communication and coordination. These elements of centralization, hierarchy, and resultant stability reflect HSBC's Defender strategy.

This strategy ensures certainty and minimal change, while HSBC bank aims to provide customers with a diverse range of offers across multiple countries. Continuously, HSBC has entered one country after another, expanding their market when successful strategies are implemented.

HSBC demonstrates both stability and a desire for further development, reflecting its Analyzer-strategy. Initially, its goal was to become the

World's Local Bank, and now it strives to maintain this position alongside other banks. This indicates that HSBC employs Michael Porter's differentiation strategy.

HSBC has identified several key CSR issues through collaboration with stakeholders such as investors and NGOs. These issues are segmented by customer group and include Personal Financial Services involving Consumer Finance, Financial inclusion and consumer debt, Secure and convenient delivery channels, and Customer satisfaction in Commercial Banking.

Collaboration with other financial service organizations is encouraged in many areas of CSR to establish best practices. Additionally, HSBC supports various initiatives such as the Climate Group, the Carbon Disclosure Project, and the Extractive Industries Transparency Initiative.

At an industry level, HSBC actively participates in the United Nations Environment Programme (UNEP) Finance Initiative. In October 2004, HSBC joined the climate change session at UNEP's Global Roundtable. Moreover, HSBC is a member of UNEP Finance Initiatives' Asset Management and Climate Change working groups.

Furthermore, HSBC has implemented a Group-wide policy in 2004 to counter bribery and corruption. This policy demonstrates their endorsement of initiatives like the UN Global Compact, the OECD Convention on Combating Bribery, and the International Chamber of HSBC's collaboration with other financial institutions in the UK through the FORGE group. HSBC is also involved in the London Benchmarking Group. It is important for companies to consider their internal environment.

The internal environment of a company refers to its culture and the way it manages knowledge flow. Culture is a shared meaning and can replace formalization, although it is not written out. Culture can be categorized by observable symbols, such as a logo, and underlying values or beliefs, which determine employee behavior. By establishing a strong culture, a

company can enhance its effectiveness by facilitating smoother information flow.

The internal environment is crucial for a company, including knowledge management and its impact on effectiveness. HSBC is no exception, as it also has an internal environment that we will focus on in this case. Culture plays a significant role in promoting organizational effectiveness for HSBC and any other company.

HSBC aims to foster a culture that is characterized by fairness and diversity. As previously stated, HSBC maintains a high level of formalization and dispersion. This discussion will now focus on other aspects of the culture, such as responsibility, particularly regarding employment considerations.

This means that HSBC aims to hire high-quality employees to meet customer needs and grow the business. Educated and skilled employees contribute to a higher standard of service and communication. To excel, employees should communicate efficiently and be involved in decision-making. They should also have trust in HSBC for their career development and a strong relationship with their direct managers.

To promote growth and cultivate a solid connection, employee involvement in decision-making and increased accountability are crucial. Furthermore, recognizing their unique contributions is essential. This involves granting employees the chance to present their ideas to the board of directors. If an idea proves beneficial in enhancing the company's efficiency, it may be implemented. The ultimate goal is to ensure that employees comprehend the organization's strategy, reputation, and Group Values – predetermined principles they are expected to uphold – which can also be referred to as specific behaviors.

These values, which can be categorized as terminal and instrumental values, form the Group Values of HSBC. These Group Values include being open to ideas and other cultures, being connected

with customers and colleagues, and being dependable. HSBC has integrated these values into its operations standards, training programs, development initiatives, and personal mentorship for senior executives. Embracing new ideas is achieved by prioritizing the team's interests over individual interests and fostering a diverse culture through a meritocratic approach to promotions. This means that employees have specific roles within the hierarchical structure that come with additional responsibilities. These instrumental values reflect how the management interacts with employees.

Connecting with others is achieved through proactive management and appropriate delegation of authority. HSBC also takes on the responsibility for the social and environmental impacts of their decisions. For example, if HSBC chooses to expand to a new country and this affects the local residents, they take responsibility for them. These values are crucial as they determine how the company interacts with its surroundings. Ultimately, being dependable comes from a strong commitment to quality, competence, and fair dealing, as well as maintaining high personal standards for employees.

The values stated in this paragraph pertain to reaching a specific level of service and are regarded as final. HSBC places utmost importance on two key business principles: delivering exceptional customer service and operating in a manner that is both effective and efficient. Each value is well-defined for every employee, and every employee follows these values diligently, resulting in a solid organizational culture. HSBC encourages a high level of individual initiative among its employees due to the responsibilities bestowed upon them.

HSBC establishes clear goals for its employees, setting a clear direction for the company. The company encourages its employees to propose new ideas, giving them the freedom to do so. However, this freedom also

entails risks. To manage these risks, HSBC has a Group Risk Committee composed of independent, non-executive members who provide an objective perspective on the company's risk management.

The following table explains the roles fulfilled by each part of the management in risk allocation problems at HSBC. HSBC has implemented a reward strategy system to stimulate employees and encourage them to perform and generate ideas. This strategy aims to improve efficiency for both employees and management. Additionally, knowledge management is also an integral part of HSBC's culture.

This is the method by which company workers are processing their knowledge. However, it also signifies the exchange of information. Essentially, a suitable communication strategy is essential for effective knowledge management. One platform utilized for this purpose is the HSBC website, which enables employees and management to interact with one another.

The primary purpose of the electronic communication system is to serve the stakeholders. The top-level management holds the most knowledge about managing the company and its culture, making them crucial to maintaining the culture. If the management undergoes significant changes, the culture will also be affected. The culture plays a vital role in ensuring that there is a suitable availability and flow of knowledge and information by promoting improved communication among employees and with their direct management.

HSBC has a well-defined culture that distinguishes between top management and lower management. In addition, personal development is emphasized for employees at HSBC. The organization's values, as outlined in the Group's Values, center around being open, connected, and dependable. These values resonate with all employees.

Electronic communications systems, such as email and the HSBC website, play a crucial role in the success of knowledge management. Additionally,

the organization's culture also contributes to effective communication. The firm's response to environmental uncertainty and its adaptation to different cultures are discussed, along with its involvement in charity projects and the reasons behind them. As part of their international network, HSBC operates around 7,500 offices in 87 countries and territories across Europe, the Asia-Pacific region, the Americas, the Middle East, and Africa. Consequently, HSBC faces a significant amount of environmental uncertainty that needs to be addressed.

HSBC's corporate identity is focused on targeting emerging markets, particularly in India and China. The HSBC Group has a strong presence in these markets due to its history and involvement in global trade. This presence allows HSBC Global Asset Management's investment professionals to have local access across the world, creating investment opportunities in a variety of emerging markets. Over the course of more than a century, HSBC has established branches even in countries that were previously considered closed or restricted. This expansion has helped HSBC become a respected institution in these markets. They currently manage a wide range of emerging markets funds, some of which are among the largest in their sectors.

At HSBC Global Asset, we provide access to rapidly expanding global markets with a range of investment styles and approaches tailored to our customers' requirements. Our team of professionals, based in 20 strategic locations, diligently research over 200 emerging markets. We offer highly acclaimed local, regional, and global investment products that can be accessed through separate accounts.

We strive to discover investment possibilities and grant entry to swiftly advancing markets. Our investment and product abilities enable us to cater to the requirements of diverse investors, with acknowledged proficiency in global,

regional, and country-specific necessities. These necessities are categorized into various subjects, such as core equity, specialist equity, and fixed income. Our experts conduct thorough investigations in different countries and continents, allowing HSBC to operate in a remarkable 87 countries.

HSBC values cultural exchange and understands its importance in building successful international relationships and doing business. The company believes that understanding and appreciating different values is crucial. To achieve this, HSBC has established a global Cultural Exchange program that aims to increase interaction and understanding among cultures worldwide. This program explores various aspects of culture such as fine art, cuisine, music, language, and literature. Additionally, HSBC also focuses on education in different countries by initiating various projects. The company extends its support through financial assistance and encourages employee volunteering time to invest in educational and environmental programs globally.

The majority of community projects are initiated and executed at the local level by local individuals as well as HSBC employees. Engaging in these community projects has been shown to increase involvement with local businesses and residents. HSBC dedicated over $108 million to community investments in the previous year, with approximately three-quarters of the funds allocated to education and environmental initiatives. The rest of the funding was directed towards addressing local priorities, such as areas affected by earthquakes or floods.

The HSBC has successfully supported over 300 projects, benefiting more than 500,000 children across 49 countries. Through their program, the bank's 4,000 volunteering employees have contributed to the well-being of over 105,000 children in 36 different countries. Additionally, the bank embraces environmentally-friendly practices by promoting low carbon technologies in cities through climate partnerships and assisting countries in safeguarding crucial freshwater sources.

The HSBC's commitment to these initiatives showcases their positive approach towards the countries they serve, earning them widespread acceptance and respect worldwide.

In conclusion, HSBC is a massive global banking and financial services company that operates in numerous countries. They have a significant level of differentiation and dispersion in their operations. The company also has a high level of formalisation, as all job roles are defined by strict rules. This formalisation is achieved through various techniques.

The text discusses various aspects of HSBC, including the selection process, role requirements, rules, procedures, policies, socialisation, training, and rituals. It also states that HSBC is a centralized company with decision-making concentrated at the top-level management. However, the company delegates a lot of responsibilities to employees to keep them motivated. Based on its structure, HSBC can be classified as a machine bureaucracy that highly values standardization for its effectiveness. Due to its centralized nature, hierarchical structure, and stability, HSBC can be seen as employing a Defender strategy, which prioritizes certainty and minimizes change.

HSBC aims to provide a variety of proposals to customers in various countries, reflecting the Analyser-strategy. Additionally, their unique positioning next to other banks signifies their implementation of Michael Porter's differentiation strategy. Moreover, HSBC prioritizes Corporate Social Responsibility through partnerships with stakeholders and financial service organizations. Concerning culture, HSBC strives to establish a robust culture for optimum effectiveness.

HSBC motivates their employees by providing responsibilities, opportunities for personal growth, and performance-based rewards. The company's culture is defined by their Group Values, which are categorized as instrumental and terminal values. The primary goals of HSBC are to be open, connected, and dependable. To facilitate knowledge management, the company utilizes electronic communication

systems such as email and their official website.

The HSBC bank's successful communication is attributed to its culture. Operating in numerous countries, the bank encounters environmental uncertainty. However, it effectively manages this uncertainty through expertise and thorough research before entering a country. Additionally, the bank's involvement in charity and education programs enables its ability to operate in diverse countries.

By effectively managing their environment and implementing the appropriate structure and strategy, the bank enhances its effectiveness and efficiency. All the aforementioned topics play a role in achieving this.

Suggestions

We believe that HSBC effectively addresses its external environment through its charitable and educational initiatives. Additionally, their thorough research prior to entering a new country proves to be efficient, therefore no recommendations are needed for the external environment. While culture is already a significant factor for HSBC, there are still areas where the company can make improvements.

In order to enhance communication and relationships between employees and management, improvements can be made. Currently, management is rewarding employees and assigning them responsibilities. However, it would be beneficial to consider organizing parties or get-togethers involving both management and employees. Additionally, the company could implement a knowledge management system that allows for easy access to all knowledge for every employee. To make decisions regarding the company's most valuable asset, the employees, management should strive to be more systematic and strategic.

Maintaining a strong organisational culture and appropriate structure is crucial for a company of this level. One area where management can make improvements is in their approach to working with people. Effective people management will result in satisfied employees who feel their needs are being met, motivating them to work towards their own future and

the future of the organisation. Recently, HSBC experienced a technical issue that affected its customers' ability to deposit money and use online banking.

Therefore, we recommend that they pay greater attention to their IT system and IT management in order to address these issues, as they negatively impact the company's reputation and undermine its credibility.

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