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Organisational Change at HBSC Report


Abstract

HSBC recognises the capacity of an organisation to achieve the needs of its owners and other interest groups depending on their ability to maintain a competitive advantage. Human resource comprises one of the important resources at the disposal of the organisation, which while utilised appropriately, help in terms of maintaining and increasing the organisation’s competitive advantage.

The organisation faced a situation, which prompted the adoption of change to enhance its effectiveness in executing its HR functions. It implemented an organisational change plan that led to moving all HR-related employee queries into online web-based systems.

Previously all employees addressed their queries directly to the HR department. The current paper analyses this change situation and its implementation in the context of literature in organisational change management.

Introduction

Organisations that endeavour to acquire long-term success keep on changing their ways of executing business. The most appropriate changes ensure that organisations become more profitable. Geopolitical, demographic, and technological changes in conjunction with the intense pressure on physical environments pose the need for organisational change.

Such changes also need to be combined with various security concerns and governance issues that help generate pressures that drive organisational change (Burke 2014).

Development of consciousness for scientific, opinionated, sociological, and financial characteristics of the exterior operational atmosphere of an organisation is crucial in the effort to drive strategic initiatives for its success. Change may involve proactive and reactive approaches.

While change in most cases is adopted when a new way of serving clients or a need in the market arises, it may also be adopted when a crisis occurs. Indeed, organisations, which have the capacity to identify the need for change before factors that prompt its necessity interfere negatively with their operations, stand better competitive advantage compared to those that adopt reactive approaches to implement change (Burke 2014).

Change that is implemented upon the occurrence of crisis translates to high organisational costs and a lower probability recovery from the lost competitive advantage. As revealed in the paper, this situation was avoided in case of HSBC Bank Middle East Limited.

Background to the Case of HSBC Bank Middle East Limited

HSBC bank Middle East Limited has its headquarters situated in Jersey. It comprises the biggest bank that operates in the Middle East region and in more than 70 others places across the globe. This stretch makes HSBC a global and regional product that is managed through several networks across the Middle East.

In particular, the bank has operations in Lebanon, Algeria, Bahrain, Jordan, Kuwait, Qatar, Saudi Arabia, and Pakistan (HSBC 2014). The size of an organisation correlates with its ability to employ a large number of people from diverse backgrounds, and hence the higher the number of employees that the HR arm has to handle.

In the effort to create a culture that encourages work-life balance for employees, the speed and efficiency in the expedition of strategies for addressing employee human resource-related issues became an important problem that HSBC Bank Middle East Limited needed to address.

Corporations across different industries are interested in maintaining their levels of competitiveness for continued delivery of value to their owners or shareholders. In fact, Van de and Poole (2005, p.395) reckon, ‘any organisation in today’s fast moving environment that is looking for the pace of change to slow is likely to be sorely disappointed’.

This claim suggests that organisations must welcome and embrace change that will increase their performance. Zhou and Tse (2006) support this line of argument by claiming that organisations, which reluctantly embrace change risk losing their competitive edge. Therefore, they suffer the capacity to realise the need of their clients.

HSBC Bank Middle East Limited understood that while operating in an environment of technological change, increasing its speed of expedition of the employee human resource-related issue was the key to resolving challenges, which may result in with employee conflict.

Instead of waiting for crisis to occur, the management resolved to implement online web-based system to resolve employee HR-related queries. The next sections analyse this situation from the paradigm of organisational theories of change.

Diagnosing and Planning Change

HSBC Bank Middle East Limited sought to implement HRIS (Human Resource Information System) to facilitate the execution of its HR activities electronically. The system provided several applications, including payroll management application, recruitment management application, and leave attendance and performance management application among others.

Via the system, employees could also have access to any information on their employment status, including changes in rewards system among other information of individual interest.

Web 2.0 technologies were utilised to provide employee accessibility to the system through internet at all times. It had a capability of producing customised information. This flexibility solved many of the problems as it made it easy for employees to acquire individualised responses from the HR.

The organisation’s move to adopt the change was to boost the ability of resolution of employee issues via two-way online-based communication mechanisms. This change was to enable the organisation raise its interactive capability with a large number of employees to minimise the probability of occurrence of organisational conflicts. HSBC Bank Middle East implemented the system before any conflicts were registered.

In this extent, the change that was implemented at the organisation was passive in nature. Change management theory suggests that organisations incredibly benefit by implementing a change that leads to the creation of new mechanisms of addressing customer needs (Oxtoby, McGuiness & Morgan 2002).

By simply asking how and why an organisation is not able to attain certain specified goals and objectives as stipulated in the organisation’s goals and objective statements, an opportunity emerges for the adoption of creative and innovative strategies for inducing success.

HSBC adopted change in the effort to support its strategic renewal initiatives as a mechanism of increasing its performance in a rapidly changing financial and insurance industry. Strategic renewal implies the alteration of organisational strategies via processes that involve the conception of new information bases, services, potential, or commodities (Van de & Poole 2005).

For HSBC Bank Middle East, the main concern for strategic renewal was increasing the organisation’s capabilities. This plan mainly entailed the capacity to respond to queries that were raised by employees in an online environment.

Change produces various impacts on different stakeholders in an organisation. This claim highlights the need for involving different stakeholders in the change process. Oxtoby, McGuiness, and Morgan (2002) support the importance of this approach in change management by claiming that different parties such as employees are affected by change.

In case of HSBC Bank Middle East, implementing change led to the elimination of hierarchical organisational structures that were followed when presenting and responding to employee queries.

This situation amounted to the alteration of hierarchical and bureaucratic organisational culture that persisted in the HRM practices. The change rendered all people who were charged with collection of employee complaints, filling them, and their subsequent analysis ineffective.

Owners of HSBC Bank Middle East comprise an important party that was influenced by the change. They benefited from increased returns owing to good employee management practices.

Leigh (2013, Para. 3) supports this impact of transformation by claiming, ‘change is important in organisations to allow employees learn new skills, explore new opportunities, and exercise their creativity in ways that ultimately benefit the organisation through new ideas and increased commitment’.

Therefore, change is all about enhancing employee performance by putting in place mechanisms of enabling them achieve better outputs. One of such approaches is diversification of the jobs done by employees in organisations. This noble paradigm of organisational change underlines the significance of the HSBC Bank Middle East’s changes in terms of using web-based HRM technology.

Organisational Change Theories and Models

Theory X and Theory Y

Change involves undertaking different tasks, which while completed amount to the realisation of the planned change. People have different motivations towards execution of these chores within an organisation. An important approach to the evaluation of motivation of people entails McGregor’s theory X and Y.

Theory X postulates that people are normally lazy, and that they often run away from responsibility (Lorsch & Morse 2006). Hence, McGregor recommends that supervisors and managers have to conduct close supervision for their employees to realise the most out of their abilities (Lorsch & Morse 2006)

Theory X calls organisations to implement hierarchical managerial structures. This strategy ensures their capacity to exert control while leaving very little room or even no room for delegation of responsibilities while executing change.

Directly congruent with this assertion, Lorsch and Morse (2006) assert that achieving organisational goals from the basis of theory X demands that managers deploy coercive and threatening leadership techniques. The aim is to ensure compliance.

Application of theory X during the process of implementing change can potentially lead to mistrust between various stakeholders who are affected by the change, especially those who are scheduled to facilitate change implementation such as managers and employees of the HSBC Middle East Limited.

To mitigate change implementation challenges, HSBC Middle East Limited sought to balance compliance and the need to prevent probable turnover that could emerge from organisational conflicts during the change implementation process.

For example, the new HR management system was implemented slowly, as people tended to maintain status quo. Indeed, the capacity for people to prefer status quo constitutes a major cause of resistance to embrace change. Employees were promised that the old system would only be shutdown when everyone was aware and able to use the new system.

Theory Y holds that employees possess self-motivation and/or exercise personal control. It also claims that they are highly ambitious of getting things done (Lorsch & Morse, 2006). It prescribes that workers benefit from their labour, particularly if it is bodily and psychologically satisfying. Satisfied employees solve problems more proactively.

People who are inclined to this school of thought assert that employees are always ready to accept responsibilities. They utilise self-control and self-direction to ensure their capacity to realise their organisational chores.

From the paradigms of theory Y, Lorsch and Morse (2006) add that when provided with opportunities, people possess incredible eagerness to achieve positive results. HSBC Middle East Limited anticipated its employees to demonstrate eagerness in terms of utilising the new system as its had the capacity to fasten the processing of their HR-related queries.

Employee contentment and eagerness to do well in specific tasks act as enormous sources of motivation.

Upon contemplating the role of theory Y in enhancing motivation of employees, managers have embraced it while theory X has been incredibly challenged since it supports managerial theoretical approaches that pose insignificant impacts on competitive advantage in the modern globalised and sophisticated organisations (Lorsch & Morse 2006).

HSBC Middle East Limited implemented its change by cutting the traditional HR management approaches in phases. This strategy suggests that theory Y can potentially reveal and provide reliable evaluation of change efforts at an organisation.

Apart from theory X and Y, other theories, which can help in the analysis of change that was implemented at HSBC Middle East Limited encompass organisational development, systems theory, social world, and complexity theories.

Social World Theory

Social world theory postulates that change arises through negotiation followed by renegotiation among different organisational stakeholders. It maintains that organisations that implement change should consider parties that are involved in the change in addition to the indicators of change without negating the functions that the indicators endeavour to accomplish (Spector 2007).

Tensions and challenges emerge during the evaluation of issues that are necessary to realise change, especially in terms of the efforts to achieve the desired satisfactory quality improvements during the change process.

For example, while implementing change at HSBC Middle East Limited, difficulties emerged between the need to balance between the increasing need to have employee queries expedited at a high speed and the need for precision and accuracy of responses to the queries raised by employees in real time.

Organisational Development

Organisational development theory focuses mainly on the need to plan organisational change. This claim suggests that leadership in any organisation that seeks to implement change must have foreseen the need of a desired change (Spector 2007). The theory highlights the importance of striking an agreement between various individual goals with organisational goals.

From the paradigm of organisational development, change requires effective organisational communication, flexibility, and empowerment of the involved change agents. Leaders need to plan change processes by offering the definition of the current organisational state and the intended outcomes upon change implementation.

Organisational development theory holds that people resist change due to reasons such as discontent with the change efforts. For instance, it may impair the status quo’s capacity to meet their psychological needs. People may also worry about probabilities of mishandling the change process by organisational management and raise doubts on the possibilities of change success (Carnall 2003). Change may also threaten employee jobs security.

Systems Theory

Systems theory suggests that various components of an organisation are interrelated. Upon improvement of the first component, a need arises for improving the second.

In the determination of the overall implications of the change, systems theory emphasises the need to measure an organisation’s aspects such as infrastructure, resources like human capital and financial capital, technologies, and organisational tasks in an effort to determine their relationships. These variables lead to change upon their alteration, whether singly or in their combination (Jick & Peiperl 2010).

HSBC Middle East Limited has been endeavouring to implement computerised financial and customer management systems. While aligning elements that are necessary for creating an organisation that is capable of deploying technology to increase its performance, implementation of online web-based HR management systems was incredibly significant.

Complexity Theory

Complexity theory focuses on measuring the degree of heterogeneity and/or diverseness of organisational environmental factors, including suppliers, employees, technology, and departments among others.

McKenzie and Kims (2004) add that its aim is measuring the manner in which elements in micro-levels of any complex system influence the resulting behaviours of an organisation and its effect on the overall outcomes of macro-level elements.

The rising complexities in an organisation give rise to complexities in terms of understanding change together with utilisation of the existing information to plan for organisational functional elements.

The rising complexity translates into changes within an entire system. McKenzie and Kims (2004) inform that complexity theory reveals how the increasing organisational complexity renders the adaptation of an organisation to the rapidly changing environments impossible.

It nullifies the ontological theoretical explanation for changes through the rejection of the existence of a direct relationship between causality and effects. An organisation that operates within limits that almost lead to an instability point generates innovative and creative behaviours at every level of the whole system.

Complexity theory also confirms that instability between the components of an organisation causes its evolution so that at a given threshold, new relationships emerge between organisation’s internal and external factors.

Analysis and Evaluation of HSBC Middle East Limited using Systems Theory

Systems theory analyses an organisation from the paradigm of being composed of a number of systems. At HSBC Middle East Limited, employees constitute one of the elements that make the organisation. From the systems model approach, planed alterations in the dynamics of this element also influence other components that relate to it.

Mitigation of any resistance to change at HSBC Middle East Limited ensured that employees did not feel threatened. The repercussions included speedy expedition of various employee- related HR issues. This situation had the implications of creating happier, motivated, and more committed employees who were capable of attaining better performance in terms of profitability.

Higher profit levels result in the availability of financial resources for HSBC Middle East Limited projects, which are beneficial to the communities and the society within which it is established. Higher profitability also means availing more financial resources for rewarding employees more competitively.

Since employees are happier when their queries, particularly those that result in higher turnover or low productivity are addressed, the change ensured their satisfaction, and hence better work-life fit (Carnall 2003). This outcome translates to better relationships with family members.

Therefore, the change will foster the existence of linear relationship between it and all system components. In this extent, employees constitute an environment internal factor at HSBC Middle East Limited that influences all other variables.

The above propositions are made based on the hypothetical system model for evaluating change in an organisation. However, in practice, the case of HSBC Middle East Limited evidences that while some key players embrace change positively, some may oppose it.

For example, HR personnel whose functions in HSBC Middle East Limited are replaced by online web-based HR management system may reluctantly make requisite decisions where inputs of human decision loops are required. The overall effects include reduced effectiveness of the system in expediting HR-related information. In such a situation, system failure may occur.

This situation may lead to even higher times of responding to employee HR-related queries. Luckily, at the organisation, this case never happened. Bureaucratic culture in change implementation process at HSBC Middle East Limited facilitated compliance with change initiatives.

Perspectives of Organisational Culture in Change Implementation

HSBC Bank Middle East Limited values its entire people and notes that they all count in achieving its success. This case encompasses a major aspect of its organisational culture. In this regard, culture refers to the ‘shared basic assumptions that an organisation learnt while coping with the environment and solving problems of external adaptation amid internal integration’ (Oxtoby, McGuiness & Morgan 2002, p.315).

Such assumptions teach all workers of an organisation the most ample procedures of seeking solutions to various problems. From a systems approach, the beliefs bind different elements in an organisation into one harmonious major component.

Culture defines operational strategies. At HSBC Bank Middle East Limited, this strategy involves deployment of people as a source of competitive advantage by endeavouring to make all stakeholders happy. The aim encompasses ensuring that all stakeholders of HSBC Bank Middle East Limited remain focused on common goals, aims, and objectives.

Van de and Poole (2005) reckon that this aim is attained when all people in an organisation subscribe to a common way of thinking, interaction, values, and norms. Norms, values, and ways of thinking define culture, which needs to be aligned with business strategies for any organisation that seeks to achieve global success through people.

Before the adoption of change, employees at HSBC Bank Middle East Limited followed bureaucratic and hierarchical structures to have their complaints and various queries reach the head of HRM.

Thus, although the organisation valued the role of employees in driving its success as stated in its social corporate responsibility statements, a culture that encouraged bureaucracy and hierarchy hindered effective deployment of people in terms of achieving competitive advantage.

HSBC (2014) states that HSBC Bank Middle East limited recruits the best talents irrespective of ethnicity, gender, disability, and other demographic characteristics. This claim implies that the organisation shares the norms and value for the needs of respecting people’s diversity.

It also offers competitive reward and salary packages for its employees whose relationships at the workplace are guided by sound social values. Most importantly, the organisation continues to seek for new strategies for reducing work-life related conflicts, which may impede the morale of its people.

This concern underlines the principal reason why HSBC Bank Middle East Limited sought to look for effective ways of addressing employee queries in real time.

People generally resist change (Carnall 2003). This claim implies that successful implementation of change require an organisational culture that compels people to follow guidelines.

At HSBC Bank Middle East Limited, bureaucratic culture was instrumental in ensuring that employees followed precisely the set guidelines so that after the change was adopted in terms of mechanisms of forwarding their HR-related complains, all employees adopted online web-based approaches as opposed to traditional routes.

Bureaucracy was a major impediment to the change implementation. Much formal authentication was required when designing change solutions.

This process involved multi-level organisational assessment of online-based HR management systems. However, amid these challenges, adequate technological resources such as computers and the existence of computer literate employees made the change easily adaptive at the organisation.

Model for Change Implementation

Upon the identification of the obligatory changes that can produce the necessary success, the next step entails change implementation, which is accomplished with the aid of an appropriate theoretical model for change implementation such as Lewin’s model and sequential model.

Bearing in mind the purpose and the parties that are involved in enhancing change at HSBC Middle East Limited, the organisation implemented change through Lewin’s model. Under Lewin’s model, organisational change occurs through three main stages, namely ‘unfreezing, moving, and refreezing’ (Spector 2007, p.29).

In the unfreezing step, organisations create and interrogate the appropriateness of the current practices (status quo). HSBC Middle East Limited found its current practices inappropriate. Therefore, it progressed to stage two of the Lewin’s model. This stage involves redesigning and reorganisation of responsibilities and roles of various stakeholders who have the responsibility of implementing the desired change (Spector 2007).

HSBC Middle East Limited successfully achieved constraints of the second stage through determination of the mandates of various stakeholders who are involved in enhancing the implementation of the new HR management system. The system led to a reduction of responsibilities of the human resource management personnel under the traditional approach.

To keep them motivated, HSBC Middle East Limited did not consider revising downwards the amount of reward that was offered to them. Therefore, the third stage in Lewin’s model that entails the alignment of the pay and a reward system with the new responsibilities and roles was not evident in the change that HSBC Middle East Limited adopted.

According to Lewin’s model, during change implementation, in the first stage, an organisation also needs to consider ‘diagnosis of any internal barriers of improved performance followed by a promotion of the supporters or removal of resistors in the second stage’ (Spector 2007, p.29).

In such an effort, organisations create new structures. This observation reveals HSBC Middle East Limited’s success in implementation of the change. It was experienced in structural and hierarchical operational systems in the HR management.

The Impacts of Organisational Change

From the systems approach, an organisation constitutes a system that possesses various functional elements, which operate in harmony with one another. Consequently, it may affect all functional units within an organisation.

Jick and Peiperl (2010) confirm that any change affects organisational policies, procedures, guidelines, and rules that are deployed to control the conduct of stakeholders such as employees, society, and organisational managers. These alterations may induce negative or positive impacts on the overall operation of an organisation.

Change can increase the performance of some employees. However, in some situations, some may have reduced work morale. The situation leads to low performance.

For example, at HSBC Middle East Limited, it was anticipated that employees whose roles would be replaced either partially or totally by the online web-based system for collection and subsequent responding to employee HR-related queries would have fear and perceptions of job insecurity. However, workers whose queries will be addressed in a quicker way will consider the change an important aspect.

Change may create parochial self-interest. Different perspectives on change situations may create misconceptions and negative perceptions from various parochial people within an organisation. Such people influence negatively change implementation processes (Burke 2014). It creates intolerance and misunderstanding among people who embrace change with those who oppose it.

This situation may lead to the emergence of organisational conflicts. More importantly, people resist change due to the fear of facing the unknown. This implication may lead to augmented strain, nervousness, panic, and exhaustion.

Despite the fact that change may have negative implications, it is desired as it increases the available knowledge bases, range of products and service, and innovative and creativity levels of organisations. These aspects enable an organisation to operate in a changing business environment (Leigh 2013).

Where technological changes prompt the necessity of adopting change, an organisation acquires the ability to produce its services and products at reduced costs so that it can exploit the low-cost strategy, which enables it penetrate deeper in the global market.

At HSBC Middle East Limited, change was highly desired. Inability to address employee HR-related concerns meant that HSBC Middle East Limited risked losing the motivation and dedication of employees.

Conclusion

Change in the HR management system at HSBC Middle East Limited comprised an important aspect of organisational change that altered its performance. With the ever-increasing incidences of cyber threats on organisations’ computerised information systems, adopting the new HR management system also comes with risks.

Thus, the information system department had some added responsibilities in terms of mitigating these risks. Alignment of these added responsibilities with reward systems as suggested by Lewin’s model becomes important.

Therefore, in the quest to ensure that HSBC Middle East Limited succeeds with implementation of the changes in the long-term, it is important to consider motivating and aligning the personnel who are tasked with providing information security with the organisational goals that define the necessity for change.

This goal can be achieved through a revision of reward and remuneration packages for all personnel whose responsibilities and roles in the organisation have increased following the implementation of the change.

References

Burke, W 2014, Organisational Change Theory and Practice, Sage Publications, Inc, New York, NY.

Carnall, A 2003, Managing Change in Organisations, Prentice Hall, Essex.

HSBC 2014, About HSBC: Welcome to HSBC UA, <>.

Jick, D & Peiperl, A 2010, Managing Change: Cases and Concepts, McGraw-Hill Irwin. New York, NY.

Leigh, M 2013, Why is Change Important in an Organisation? <>.

Lorsch, N & Morse, J 2004, ‘Beyond theory Y’, Harvard Business Review, vol. 3 no. 2, pp. 91-107.

McKenzie, C & Kims, J 2004, ‘Aesthetic as an aid to understanding complex systems and decision judgment in operating complex systems’, Emergence: Complexity and Organisations, Special Double Issue, vol. 6 no. 2, pp. 32-39.

Oxtoby, B, McGuiness, T & Morgan, R 2002, ‘Developing Organisational Change Capability’, European Management Journal, vol. 20 no. 3, pp. 310-320.

Spector, B 2007, Implementing Organisational Change: Theory and Practice, Prentice Hall, New Jersey, NJ.

Van de, V & Poole, M 2005 ‘Explaining development and change in organisations’ Academy Management Review, vol. 40 no. 3, pp. 394-404.

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