Culture and Organization - Essay Example

Culture and Organisation of the of the Contents Background to the organization and its environment 3 Report Focus 3 Explanation of the theoretical framework 4 Justification 6 Analysis 6 Conclusion 10 References 12 Background to the organization and its environment Hong Kong and Shanghai Business Corporation, popularly known as HSBC, is a multinational financial and banking services organisation. Founded in the year 1901 by Thomas Sutherland, the company rose to become one of the largest banking and financial service providers across the globe (HSBC, 2014b). The bank is headquartered in London, Britain. The bank dates back to 1865, when initial branches were launched in Hong Kong and Shanghai (HSBC, 2014b). At present, the company is run by Douglas Flint, Group Chairman and Stuart Gulliver, Group Chief Executive (HSBC, 2014c). The company is involved in a range of services, including consumer banking, credit cards, investment banking, mortgage loans, corporate banking, wealth management and private banking. The bank refers both Hong Kong and United Kingdom as its ancestral markets. The company has more than 7500 offices across 85 counties. The branches and subsidiaries are spread across Asia, Africa, North America, Europe and South America (HSBC, 2014d). The company operates across four business categories: commercial banking; global banking and markets; wealth management and retail banking; and overseas private banking. HSBC’s internal environment is based on values such as, integrity, diversity, cultural inclusion as well as global expansion for growth and development (HSBC, 2014a). Employee empowerment is a major strategy followed by HSBC for overall development of the organisation. The bank believes that empowered employees will help in meeting expectations of customers, society, investors and regulators. The bank has also given major stress on its culture and rich tradition. The culture of HSBC is unique mixture of traditional values as well as contemporary management practices, making it a distinctive organisation (Trompenaars, 1993). Report Focus Significant differences lies among different cultures in terms of behaviour, communication and body language (Adler, 1997). One of the major distinctions between high and low context cultures was proposed by Edward T. Hall, a well-known anthropologist from America. High context culture is defined as the one where communication is highly implicit and coded in physical context or other communication channels, apart from verbal. A low context culture can be defined as a type of communication where major part of the information is present in explicit code and little is transmitted through other mediums such as, gestures or body language (Chaney, 2005). The current focus of the report is to understand the organisational practice followed by HSBC in different nations. The major objective of this study is to concentrate on various cultural practices followed by the bank’s subsidiaries and branches in different regions. HSBC has its branches worldwide and it is important for the organisation to adapt itself according to the prevailing culture and tradition. Focus: The focus of the current report is to analyse internal organisational practices and culture of HSBC in terms of the theory. Explanation of the theoretical framework In order to understand the cultural practice of HSBC, Harrison model of organisational culture has been implemented. Harrison has stated that although the model is descriptive, it can still be largely used for evaluation of organizational culture. According to the model, culture of an organisation can be diagnosed on the basis of four dimensions. These are role-oriented culture, power-oriented culture, support-oriented culture and achievement-oriented culture. Further analysis of the model reveals that each cultural dimension is measured within two operational modes, which are centralisation and formalisation. For instance, in a high formalisation culture, order, predications and consistency will be maintained (Stapley, 1996). This also suggests that formal regulation and rules in an organisation are internalised by the employees, without written documentation or any coercive force. As a result, it can also be said that low formalisation of regulations and rules can lead to a fragile organisational culture. The four cultural dimensions explained below will help in evaluating the internal organisational practices followed by HSBC worldwide. Power dimension According to Harrison and Stokes (1992, p14), a power-oriented culture can be defined as “organizational culture that is based on inequality of access to resources.” Every corporate require certain powers for influencing behaviour and exercising control. The modes of operation in this culture are low formalization and high centralization. There is a central power, which exerts influence across all verticals and sections of the organization. Here employees and management are connected through specific functions and roles (Brown, 1995). This can also be defined as rule-oriented as it is dominated by a culture that respects authority and rationality in any strategic action (Martin, 1992). In contemporary business world, a power-oriented culture is generally seen in smaller organizations as size can be a problem for bigger firms (Pandey, Coursey, & Moynihan, 2007). Role dimension Harrison has described a role-oriented organisation to be one where power of a leader is substituted by a system of procedures and structures. Here focus is mainly directed at specialisation and job description. So, in this culture, the job and associated rules and guidelines are more important than the employee who is performing that job (Hampden-Turner, 1990). Each department of the organisation has a specific role or functions such as, design departments, finance department and marketing department. The foundations of such corporate are based on centralised and formalised functions, controlled by communication and role procedures (Kotter & Heskett, 1992). Achievement dimension In an achievement culture, the management and employees are aligned towards a common vision or purpose. This is also described as task culture, as preference for tasks is higher than the employee performing it. Here power is often diffused, based on expertise, rather than charisma or position. In this culture, formalisation is high and centralisation is low. It is hugely efficient in those sectors where life cycle of products is small (Newman, 1996). Decisions are taken at a high speed and tasks are divided among teams. A distinctive trait of this culture is higher level of flexibility and freedom among employees (Armstrong, 2006). Support dimension Unlike achievement dimension that focuses on development of teams and group, a support-oriented culture works by promoting individuals as an organisation’s pivotal aspect. This organisational culture stresses on mutual trust and respect between organisation and the individuals (Watson, 2006). Peer influence and appraisal on the basis of performance and achievement is dominant. The overall effect of management decision on employees is also taken into consideration. Justification The primary function of any organisational culture is defining the goals, mission as well as short and long term visions; this in turn paves a path for undertaking necessary actions. This path provides a life to the organisation (Mead & Stokes, 1992). HSBC is a very old organisation with a rich tradition. The firm has passed through various cultural generations since its establishment. As a result, it is imperative to understand the different cultural transformation of HSBC with respect to its long term and short-term goals. Apart from that, the present theory will also help in identifying ways in which various issues related to control, coordination, uncertainty and competitiveness are evaluated and stabilised using concepts and framework of the theory explained (Pandey, Coursey & Moynihan, 2007). Analysis As stated earlier, HSBC was established in the year 1965 in China and was launched in London in 1901, after its takeover. Hence, the company have come a long way in terms of cultural transformation, change in business and management practices. Current organizational practice The general organizational practice followed by HSBC can be understood with the help of Harrison’s model of organizational culture. In general, work ethics is given high priority and the company follows a localization strategy by filling the local high profile positions with experienced and skilled local professionals (Terpestra & David, 1991). So, it can be said that HSBC has been following a low centralization approach while managing its branches and subsidiaries across various foreign cultures. The overall management approach adopted by HSBC is to provide effective management within the entire organization. As a result, the company promotes flexibility and individual decision making. Furthermore, the organization is involved in constant training and development for transforming employees into achievers. The management approach relies on achievement dimension for success and growth of organization (Gibson, et al., 2012). Another cultural dimension from Harrison’s model that is extensively followed in HSBC, especially while implementing strategic management and organizational decisions, is the role-oriented model. In a role-oriented culture, stress is put on the job description as well as rules, guidelines and performance measures associated. This culture is essentially followed among base line or ground level executives, those who are in daily contact with customers (Donnelly, Gibson & Ivancevich, 1992). Each member in HSBC’s organizational structure is provided with a specific set of functions with the objective of contributing to overall performance of the organization. Establishment of specific functions and structural guidelines helps in more effective management as these enhance ability of the firm to coordinate, plan as well as control all strategies and activities. In a similar manner, formalization strategy has been established in departments, where repetitive transactions and activities are more frequent. For example, the IT and the help-desk department in any branch of HSBC are regulated by a set of guidelines and rules, such as, daily monitoring and settlement of customer complaints and daily transfer of accounts. Communication flows, process of interaction as well as structural institutionalization are all pre-defined in these sections of HSBC (Cooper, 1994). Another culture followed in HSBC that has critical significance and influence is the acquiring and hiring policies. The company has also been following familiarization of employees with the general business functions through various creative strategies. For example, management trainees appointed by HSBC are first acquainted with entire working of the business through a six months induction program. Here newly recruited candidates need to work in various departments and functions of the organization in order to realize the job that fits best with their capabilities and skills. During this process, they are supported by the higher management in evaluation and determination of their job roles (Denison & Spreitzer, 1991; Nelson and Quick, 2012). Even so, once the job is fixed and role of the management employees are determined, they are expected to perform the task with maximum efficiency and dedication. This can be related to the high formalization role-oriented theory, where actions or tasks performed by an employee determine his or her importance and influence, rather than the person itself. This also breeds team spirit as well as creative orientation, where employees simultaneously learn and develop in order to gain certain position in the organization (Trompenaars, 1993). In this way, the culture of teamwork, learning from experience, participation, decision making and creativity is embedded in the internal organizational culture of HSBC. HSBC has also been known for its culture of employee empowerment. According to the organization’s top management, empowerment entails greater involvement than normal participation among employees. Here employees are able to make their own decisions and are responsible for them. Thus, by undertaking important responsibilities, the employees are able to harbour confidence, which in turn creates a sense of devotion and commitment (Denison, 1990). Development and integration of concepts and models in HSBC’s culture As stated earlier, the company has been continuously transforming its culture and management philosophies as per the changing trends and patterns of business. In 1998, HSBC had ranked among top ten financial institutions across the globe (HSBC, (2014b). At that time, the board of directors and the management were following value strategy, indicating implementation of established rules, policies and guidelines. The objective was to follow winning practices and strategies in order to retain the top position in future. Nonetheless, the business and economic environment worldwide had undergone significant changes since 2000 (ODonovan, 2008). This had forced HSBC to reorganize its internal and external organizational culture and strategies. The higher management realized the need to diversify its income sources, opt for up-selling and cross-selling activities for increasing bank’s share in existing customers’ wallet, enhance the service delivery process, induce more atomization process, control costs as well as improve overall operations by infusing more advanced technology. In order to streamline the service process, HSBC needed high automation and centralization in its functions. As a result, the bank needed an entire restructuring of its functions, departments as well as culture (Ahmed, 1993). The company proceeded by assessing the strategies and current philosophies that were being followed by HSBC. It was also found out that the overall moral among employees was low. Mediocre employees took job security for granted and executives showed little interest in contributing to the strategic change process. HSBC workforce was unable to understand the external environment and its impact on them; and therefore, refused to cooperate with the realignment (Terpestra & David, 1991). One of the major applications of Harrison’s model is to differentiate between the desired culture and current culture followed in the organization. So, initial survey on HSBC’s current organization culture had revealed that the prevailing and the required culture were not in line. A wide gap was found between current and desired organizational culture and the management was burdened with a huge task of minimizing this gap (Harris & Mossholder, 1996; ODonovan, 2008). In order to achieve the newly formulated corporate vision and mission, a strategic program for change management was established. This program was focused on people and was established on flowing objectives; addressing attitudes of employees for strategic change, explaining the daily application and benefits of new organizational culture, continuous feedback and updated information to staff and employees regarding organization’s progress in strategy implementation and motivating employees to initiate their contribution towards the change management process (Schneider, 1994; Finkelstein, 1992). The company had implemented a two-step strategic process for implementing the objectives. This strategic direction was brainstormed and decided by individuals from different departments such as, head of institutional and corporate banking, HR head, training head and financial head. From the theoretical perspective, it can be said that the new organizational culture was formulated on a power-oriented approach, where few of the powerful members established and introduced global policies and guidelines to be followed by the entire organization (Pettigrew, Ferlie & McKee, 1992). The above team decided to launch a program involving two stages. The manager for the program directly reported to the above group, denoting a hierarchal structure. The first stage involved a centralized event stretching 2000 over a day, which had continued from November to July 2001 (ODonovan, 2008). In this phase, various cross-cultural teams were appointed to manage the change process as well as accurately communicate the organizational mission and vision (Mead, 1993). In the second phase, learning from the above event was implemented in the local branches. This was done by using certain tools and techniques in their local and normal working hours. The employees were also encouraged by their team leaders, which helped in reinforcing their confidence on the new techniques and tools learned. In every line, individuals were identified who could act as team leaders and were given the responsibility of monitoring and leading their groups. An approach for experiential learning was applied where employees were constantly supported and encouraged for performing their task, reflecting on the learning and subsequently connecting it to their future performance and growth (Hatch, 1997). There are few important features that will help in understanding the program’s direct implementation of Harrison’s organizational model. Firstly, the leadership was transferred from top managers to junior and ground level staffs; this enhanced overall decision making capacity of the organization. In addition, the program embedded experiential learning attitude among employees through simultaneous learning and implementing processes in their daily workplace (Stapley, 1996). At the end of the program, a new service culture was established based on continuous workplace learning. This integrated an entrepreneurial and risk taking initiative in an organization, which has been known for its long standing traditional management. The internal environment was successfully aligned with the continuously evolving external environment (ODonovan, 2008). So, a support and achievement oriented organization was created from a culture that had been highly role-oriented. Using the above philosophies of organizational culture, HSBC has achieved numerous millstones. The company undertook various acquisitions and takeovers; and as a result, expanded through these subsidiaries. Nonetheless, the company has always been using its experience and expertise in every local country they enter. Owing to its huge expansion strategy, the management has imbibed localization among its core strategic values. The corporate culture is created by consolidation and integration of businesses. Though the standards, guidelines and policies of the firm remain intact, culture and workplace practices are formulated locally, signifying that preferences are given to the local culture and practices (Alvesson, 1993). In order to reduce the gap between expected organizational culture and current practices, the financial firm adopted a single identity for the entire HSBC group. This helped in quick transmission of the company’s values and philosophies to local subsidiaries and branches. The company realized that huge differences can exist between organizational culture of the host and the parent company. Therefore, the company introduced strategic organizational changes with the objective of aligning orientation and goals of HSBC, its subsidiaries and other acquired firms (Senior, 2009). Conclusion The objective of the current study was to analyze the organizational practices and events from the perspective of a well-established organizational culture theory. HSBC was taken as the organization and Harrison’s model was used for development of cultural framework. HSBC is one of the oldest banking and financial service firms across Europe and has been able to maintain a culture where established policies and guidelines were followed. However, with significant changes in the global business and economic environmental, the company went for a strategic organizational restructuring. This included implementing a centralized system for flow of information as the company started global expansion. Leadership workshops and policy changes were implemented in the company with the objective of promoting innovation and experiential learning. 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