Case Study Standard Chartered Bank Management Essay
International human resource management (IHRM) that Peltonen (2006, 523) stated that it was ‘a branch of management studies that investigates the design and effects of organizational human resource practices in cross-cultural contexts’ is a major strategy of multinational enterprises (MNEs). The model of IHRM (Morgan, 1986) is composed of three parts:
HR activities : staffing, training and development, and retaining
National types: the host-nations where branches settled, the home-nation where the headquarter based, and the other-nations where the resources placed
Employee types: host-nationals who is the local working in the branches, parent-nationals who come from the headquarter, and other-nationals who are not the local of the branches and do not come from the headquarter.
The difference between HRM and IHRM is the cultural environment which effect to attitudes, values, and behaviors of people. The different environment needs some modification. Therefore, people, who experience a cultural shock in the new environment, could have whether positive or negative perception to the host-nations and locals. This is important because global business connects to the collaboration of people across the countries. The roles of IHRM manager are challenged by achievement developing practices in strategic plan of MNEs while balancing external environment of the host countries such as legal, economic, politic, and others. HR manager whether at headquarter or branches have to be aware of the cultural differences in many activities such as recruiting, training and development, and retaining which might rely on the value of that country’s culture.
Besides the cultural environment, there are a big issue nowadays that IHRM have to be able to handle is a talent shortage of MNEs in the emerging markets. The emerging markets are ‘countries that are restructuring their economies along market-oriented lines and offer a wealth of opportunities in trade, technology transfers, and foreign direct investment’ (Chuan Li, n.d.). In addition, Putzer F. Lars , Sermpetis Christos, and Tsopelas D. Georger (2008) discussed that their interview of chief HR professionals of European universal banks shows presently that they are lack of internally appropriated people for the significant positions. The gap between the number of the internal talent and the executive positions will expand approximately 25 to 40 percent within 3 years.
As the result, talent management is introduced broadly as the key of IHRM’s strategy for this issue. Patricia M. Buhler (2009) emphasized that ‘Talent management begins with HR strategic planning. This ensuring that the right people are in the right positions at the right time. It means that companies must be proactive in forecasting their human capital needs in advance.’ As soon as the organizations find out the series of significant skills needed in the future, they have to find people preparing before. The traditional way to get the talent, is to employ externally the most qualified people from the workforce market. However, the modern way is to find out the talents internally and develop them for the future position (Patricia M. Buhler, 2009). Many times that those qualified people are found inside the organization especially in the multinational enterprises that have the labor sources in many places around the world. Performance Management would be the great systematic performance appraisal engages to its employees to improve the effectiveness of organization. Laurie L. Burney and Nancy J. Swanson, (2010) revealed that ‘firms develop performance measurement (PM) systems to not only evaluate performance, but to help align managerial actions with the goals of the firm.’ In addition, this element effects positively to the retention strategy which is a major key of talent management and organization strategy. The unsuccessful retention strategy might the way to risk losing the organization’s talents to the competitors. This paper will show the case of Standard Chartered facing the situation of talent skill shortage in the emerging markets. This paper will explain its problems, its solutions and some critical analysis of the performance management tools that the bank uses to solve the situation.
Global talent management at Standard Chartered Bank
Standard Chartered bank, an international financial service company with over 1,700 branches and outlets in more than 70 countries, was merged by two banks: The Standard Bank of British South Africa, established in 1863, and the Chartered Bank of India, Australia and China, established in 1853, was set up in 1969. Its headquarter is in London, UK. By 2011, it goals to be increasing leadership capacity. As it is the international retail and corporate bank, there are employees over 75,000 people with of 125 nationalities around the world. In addition, 90 percent of the bank’s profits come from emerging markets which located in Asia, Africa and the Middle East. As the result, the bank is facing the challenges of international human resources management in recruiting people from those countries which is hard to find the talent one. Therefore, human resource has to find out the way to generate its own talent factory to serve the future significant positions.
To be the successful talent factory, Standard Chartered starts with launching the talent management processes which include acquiring, training and developing, and retaining as the main strategic objectives in every market around the world with the commitment of the CEOs. Derek Stockley (2005) defined talent management that it is ‘a conscious, deliberate approach undertaken to attract, develop and retain people with the aptitude and abilities to meet current and future organizational needs.’ Talent management would be a good approach to manage employee’s performance for the situation of people skill shortages. Talent management is a basic key of organizational accomplishment in a high competitive environment. It does not only increase the productivity of workplace, but also meet present and future organizational needs. In addition, it is consistently developing for the great business value. That is the reason that many potential companies have determined to develop their own people instead of hire new skilled one. To prepare for the skills inadequacy in the near future with some reasons such as organization size expanding, retirement or even economical change, companies should also focus on developing and retaining talent.
Even though talent management is leaded by human resources, regularly the head of the HR division, as a strategic partner, all levels of management have to work together. When the managements are took part, the perception of talent management has more high visibility. To be prosperous, companies need methodical procedures by involving people with strong connections between leadership and talent to form value of people to be the assets of the companies. In addition, it is significant to educate chief executive on the connection between the cycle of talent management and the turnover cost. They should know that compensation is not always the answer to keep a valued people. The best way to understand what employee needs is.
For the bank, this strategy does not only solve the problem of people skill shortage in the emerging markets but the plan to the future change. Its processes are including:
Acquisition: It’s the approach strategy to attract the qualified people into the part of the organization. HR have to ensure to get the right person into the right job because even though the recruitment costs expensively, employment the wrong one could cost even more.
Training and development: It’s the way to improve employees’ performance and communicate employees about their career path. Furthermore, their higher knowledge and skills will benefit them for the higher valued position.
Retention: It’s not easy to recruit the right candidates but if you have ones, you know that they are a priceless asset of your organization. Keeping the qualified people will always be a significant mission. Otherwise, the top performers want the different types of rewards. To maintain them, the management should know what really drives them and give them the satisfied rewards.
Leadership development: It’s the important program to develop the high potential for the organization’s future because managers basically operate and engage directly with their employees. Consequently, talent managers enable to influence, lead and convince people and organizations to achieve the goal of organization.
Performance management – To ensure that the goals of the organization are continuously being met with a performance of employees; this process will give employee the feedback of their performance. The important thing this appraisal has to be clear and unbiased.
Workforce planning – It helps the organization evaluating the demand of future workforce and calculating the numbers to serve that demand. For the business success, organization today has to how to plan for the dynamic of workforce.Â
When the situation of the talent shortage happens, recruiting the right people is the first step to consider. It is the surveying process to look for the candidates both the internal and external organization to attract the right one for the vacant positions. Traditionally, the competency-based recruiting approach does not recognize the technical skills of candidates, and also competencies of their behaviors. This competency, which uses the set of evaluation tools, is often determined as ‘an underlying, deep, and enduring personal characteristic of an individual that predicts behavior in a wide variety of situations and results in effective or superior performance.’ (Sullivan J, 2006). The detailed of the process defines as the follows:
Necessary job responsibilities.
However, Instead of traditional HR competency models, Standard Chartered focused on the strengths of its people to seek the right people for this situation because they believe that the best performance of people is apparent with their strengths and their strengths are matched with the requirements of proper competency requirements.
For solving the issue of talent shortage in the emerging markets, Standard Chartered focused on the internal recruitment to find the talent for the critical positions. The global systems and tools are created to collect employee’s performance. And one of these tools that the bank introduce it’s called country conversations” which is the great way to manage talent in the emerging markets by cutting across the process of building a talent pool which more complicate and take time into core processes, minimum standards, and reliable data
Human Resource (2009) discussed that Standard Chartered launches it as an appraisal process. Each year, employee has for conversations managers to do the talent management process. Each conversation, managers have the pocketbook to guide on how to do. There are four processes:
The appraisal of performance
The learning and developing to meet their objectives with the way to access it
Building careers that the employee has learned the main of their job
The engagement review that the patterned questions is asked by the managers with the fixed headlines ‘such as “know me”, “care about me”, “focus me” and “build strengths”‘(Human Resource, 2009) which targeted on building the organizational competencies
In addition, a Human Capacity Scorecard was introduced to help managers comprehend what they could support on their local talent needs and plan for their future. Its database is covered with the information of detailed work force, the people processed effectiveness and the performance impact for each business unit and country. There are four categories ranging from high-potentials to underperformers.
In the process of performance appraisal, database of employees’ and organization’s performance is very great source. The bank said that this global standards and tools would help line managers to achieve HR practices which are focused on hard data (Human Resource, 2009). As the multinational enterprise and the personality types of the people that tend to be rational and data-based person more than the touchy-feely people, it would be fit to standardize the appraisal processes clearly for more understanding and easy usage. Managers are able to look at the profiles of their team not matter where they are placed. The conversation between managers and their team follow the booklet that may reduce the bias. The obvious four categories would make more comprehend between managers and employees. In addition, the annually conversation might make a good relationship and collaboration between managers and their team that rarely interact each other.
Human Resource (2009) revealed that ‘The aim is to increase engagement, enable staff to develop and use their strengths, ensure the bank keeps its best talent, encourage energy, innovation and fun, satisfy customers and deliver better business and financial results. Managers are advised that their HR regional manager can help them access further sources of support if needed, including training and extra information.’ Nevertheless, for the effective results, these standards and tools must be reliable and the bank has to make sure that employees understand the use of those tools clearly.
According to the bank focuses on the performance of the internal people who can quicken their self-development and fit with their leadership roles in the changed environment because leadership development is needed for sustainability, growth of the business and a satisfied employee. Because of the rapid growth of multinational companies, building their internal talent pipelines is essential. In-house training and development is the most important of successful organization (Gareth Waiters cited by E.learning age, 2009). Therefore, leadership development is a good method of the bank by focusing on their employees that benefit both direct and indirect to organization which provide opportunities for existing employees and retaining valuable employees. There are some other benefits from the leadership development program to the appropriate performers:
Encourage employee morale: It is the most apparent benefit with the most difficult measurement. Poor managers can make their team distressed, and the troubled team would not do their jobs well. Effective managers are important to lead their team and prevent the impact on the work environment.
Less employee turnover: Leadership development program is also a retention program that attracts talent employees motivated by showing them the respect and career path and developing them the higher needed skills. Employee turnover impacts directly to the costs of recruitment and training new employees. It’s better to give the talent employees rewards to keep them.
More productivity: Talent managers are able to lead their team with the minimize barrier. Any error might be reduced while the productivity tends to increase because of the effective elements of the program that help managers to be the talent and accomplish the organization’s goal.
Better vision: When managers are well-bonded with their team, they can see any problem affecting them better. The problems tend to solve easier and keeps the group vision away from the blindside of the problems. If the managers walk with their team, the tangible goal set tends to be built for the team achievement.
Best supporter: effective managers are best supporters that make their team comfortable enough to share new ideas, and letting them to create and discuss any ideas in positive. Being good helpers of their team creating new ideas can help organization moving forward dynamically
To get the managers with their best skills which is the way of leadership development, Standard Chartered introduces a structured interview process which would help them to create profiles to improve their self-awareness, coaching and self-help tools. The structured interview process has shown a high reliability and validity. Some strong points of this interview are employees are asked the same questions and rated in the same scale of evaluation. With the same standard of interview process, it’s easier for managers to evaluate their team’s performance without any arguments of their team about the bias answers and unfair process.
Standard Chartered is like the other multinational enterprises that facing the situation of skill people shortage in the emerging markets. Instead of hiring external candidates which cost expensively and risk losing the internal talents who work hard for the organization but nobody sees them as valuable assets. Talent Management is an effective strategy that is introduced as core strategic objectives to serve the critical positions of the organization. HR practices in performance management are used to advice managers how they support their talents and plan for the future needs of talents, and develop themselves becoming the talent as well. The global standards and tools are launched to solve the distance trouble between managers and their local talents; it is the Country Conversations, the appraisal process that use the booklet as the source of action so that there are no problems what kind of manager’s personalities is. The bias would be reduced obviously. This approach strategy shows that HR’s role is not the main leader but advisor for the managers to manage their talents. And with the Human Capacity Scorecard that is developed becoming the extensive database keeping employees and businesses’ performance. It is an essential measurement to classify employees’ performance with other factors effecting toward their performance. This scorecard can be used in various purposes such as acquisition, development and retention. Standard Chartered Bank decides to focus on the people strengths instead of the old HR model for serving the urgently case of the lack of talent in the emerging markets. However, in the long run, the HR competency model would be more effective and standard. Moreover, it is necessary for the sustainably business success. Another interesting tool that is used in this case is a structured interview process which helps managers themselves in their leadership development and also their team performance improvement. Standard Chartered emphasizes the internal pipeline of people which would benefit to employees who try to be the talents and the organization which get the talent with loyalty. Performance management is not about the appraising and rating performance but it involves training and development, rewarding and planning for the future organizational capacity. In the business market, there is no the best strategy for all of the organizations all the time. The business environment could always change. The best way is to choose the strategies that would be optimal for the organization at that time like Standard Chartered that choose the strategies for today situation to solve the talent shortage, and the goals to be the talent factory and become increasing leadership capacity by 2011.Order Now